ECO Final questions

A bank's net worth is synonymous with its:

Capital

3 multiple choice options

One thing that is common for all bank loans is that they are

part of the bank's assets

3 multiple choice options

The federal funds market:

Is the inter-bank market where excess reserves from one bank can be loaned to another bank

3 multiple choice options

Considering a bank's balance sheet, which of the following statements is true?

Total Bank Assets = Total Bank Liabilities + Total Bank Capital

3 multiple choice options

Net interest income for a bank is:

The difference between interest income and interest expense

3 multiple choice options

The difference between a bank's reserves and its required reserves is:

Excess reserves

3 multiple choice options

A bank that cannot meet its loan commitments is experiencing the results of:

liquidity risk

3 multiple choice options

In many cases, the insurance companies will...problems of

moral hazard

3 multiple choice options

Defined-benefit plans:

Usually require an employee to work a very long time for the same employer in order to reap a large benefit.

3 multiple choice options

If someone wants to start a bank today they would have to:

obtain a charter either from the federal OR state government.

3 multiple choice options

The growth of international banking has:

Enhanced economic growth in many countries.

3 multiple choice options

In a defined-contribution plan:

The retirement benefits will vary with both the amount contributed and the performance of the fund.

3 multiple choice options

Which of the following is not a nondepository institution?

An insurance company

3 multiple choice options

Bank holding companies developed:

To get around the limitations on bank branching

3 multiple choice options

Financial regulators set capital requirements for banks. One characteristic about these requirements is:

The riskier the asset holdings of a bank, the more capital it will be required to have.

3 multiple choice options

When healthy banks fail due to widespread bank panics, those who are likely to be hurt are:

Households and small businesses

3 multiple choice options

What matters most during a bank run is:

the liquidity of the bank.

3 multiple choice options

In today's world, the goal of financial stability means:

: - Preventing large-scale financial catastrophes.

3 multiple choice options

An economic rationale for government protection of small investors is that:

: - Many small investors cannot adequately judge the soundness of their bank.

3 multiple choice options

Savings banks and savings and loans are regulated by a combination of agencies which include all of the following except:

: - The Comptroller of the Currency.

3 multiple choice options

The operational components required for truly independent central banks include:

- Monetary policies that cannot be reversed by anyone outside of the central bank.

3 multiple choice options

The central bank in the United States is:

The Federal Reserve

3 multiple choice options

The primary objective of most central banks in industrialized economies is:

: - Price stability.

3 multiple choice options

Most economists agree that a well-designed central bank would:

: - Be independent of political pressure.

3 multiple choice options

To say monetary policy is transparent implies:

: - Policymakers offer plausible explanations for their decisions along with supporting data.

3 multiple choice options

Central bank accountability means:

- Central bankers must hold press conferences to explain their monetary policy views.

3 multiple choice options

Comparing the European and the U.S. central bank systems, the Governing Council of the European system resembles:

: - The FOMC.

3 multiple choice options

Based on the membership of the Eurosystem in 2017, the median country is likely to be:

: - Fairly small.

3 multiple choice options

One reason it took so long to have a central bank in the United States is that:

: - States feared centralization of power.

3 multiple choice options

The largest of the regional Federal Reserve Banks is located in:

: - New York City.

3 multiple choice options

The agreement to form a European monetary union was signed in:

: - Maastricht.

3 multiple choice options

Executive board members of the European System of Central Banks are appointed by:

: - A committee made up of heads of state of member countries

3 multiple choice options

Each of the following items would appear as assets on the central bank's balance sheet, except:

Loans

3 multiple choice options

Bonds issued by a foreign government in its own currency would:

: - Be held by the Fed as part of its foreign exchange reserves.

3 multiple choice options

Which of the following statements is most correct?

: - Discount loans are made when banks need relatively small amounts of cash for the short term.

3 multiple choice options

For the Federal Reserve's balance sheet, the asset listed securities would include:

- Mainly U.S. Treasury and municipal bonds.

3 multiple choice options

A central bank holds foreign exchange reserves for:

: - Foreign exchange interventions.

3 multiple choice options

Reserves are:

: - Assets of the central bank and liabilities of the commercial banks.

3 multiple choice options

The conventional policy tools available to the Fed include each of the following, except the:

: - Currency-to-deposit ratio.

3 multiple choice options

For the European Central Bank (EC- , the equivalent of the FOMC's target federal funds rate is the:

: - Target refinancing rate.

The market for reserves derives from the fact that:

: - Desired reserves don't always equal actual reserves.

3 multiple choice options

Unconventional policy tools are useful when:

: - Lowering the target interest rate to zero is not sufficient to stimulate the economy.

3 multiple choice options

The European equivalent of the U.S.'s market federal funds rate is called the:

: - Target refinancing rate.

3 multiple choice options

Forward guidance is:

: - Statements today about policy targets in the future.

3 multiple choice options

The velocity of money increases if:

: - Each unit of money is used more frequently.

3 multiple choice options

The only solution available to a country experiencing extremely high rates of inflation is to:

: - Reduce money growth.

3 multiple choice options

Inflation can be thought of as:

: - A decrease in the price/value of money.

3 multiple choice options

If the equation of exchange is MV = PY, the Y represents:

: - Real GDP.

History shows that:

: - Countries with high rates of money growth have high rates of inflation.

3 multiple choice options

The demand for money varies:

: - Inversely with the liquidity of other financial assets.

2 multiple choice options