Econ 1014 final version 3 - Final Ver:ilon#3 Student 1 Identiff which of the following is not one of the five core principles of money and banking A

Econ 1014 final version 3 - Final Ver:ilon#3 Student 1...

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FinalVer:ilon#3Student:1. Identiff which of the following is not one of the five core principles of money and banking?A. Risk requires compensationB. Time has valueC. Information is the basis for decisions@ Stability creates risk2. The objectives set for the Fed by Congress are:{ Ve.y specific; this adds to the Fed's accountability(B)Bv desigrL quite vagug allowing the Fed to really set its own goalsC. Specific regarding inflation, but vague on all other goalsD. Specific on the growth rate for the economy, but vague on all other objectives3. Which of the following best completes the statement? If people increase their currency holdings, allelse the same, the monetary base:@ Does not change but the quantity ofTvl2 will decreaseB. Increases as does the quantity aflvl1C. Decreases as does the quantity of M2D. Does not change and neither does M24. The United States would be characterized as having:B n controlled domestic iuterest ratg a closed capital market and a flexible exchange rate@Xcontrolled domestic interest r*", * op"o ""iit"l market and a flexible exchange rate,P.No control overthe domestic interest rate, an open capital market and a flexible exchange rate' D. A controlled domestic interest rate, ao opan capital market and a fixed erchange rate5. The specific goals of central banks include all ofthe following except:@.flrehstock pricesB. Low and stable inflationC. High and stable real growthD. A stable exchange rate
!141::1'."thatarunonasinglebankcanturnintoabarrkpanicthatthreatenstheentirefinancial@ Information asymmetries,B. Moral hazardC. The lack of regulationU. The increased reliance on web-based funds transfers7. One of the results of the Reigel-Neal lnterstate Banking and Branching Efficiency Act of 1994 was:@ ^q, reversal ofthe branching restrictions ofthe McFadden ActB. An increase in the number ofbanks in the U.S.-g A decrease in the average size of banks-{ Adecrease in commercial banks but an increas€ in the number of savings and loans and savings banks8. In terms of economic growttr, the central bank would like to:A. Have the maximum growth r*e possibleB. Keep the growth rateaveragS*gzero0. f""p the economy close to its potential or sustainable rate of growthD. Balance every recession with a boom9. Everything else equal, if the ratio of bank ass€ts to bank capital increaseg the bank's return on equityshould:D. Cannot be deterrnined from the information provided. What is the present value of $200 promised two years from now at 5Yo annual interest?$190.00$220.00$r80.00$181.4rA. Remain constantB. Decrease@Increasel0A.B.C.@11. An investor in a3ff/o marginal ta:r bracket, earning $10 itr interest annually for a $100 U.S. Treazurybond:A Earns a lUYo after-tax refirn because interest on U.S. Treazury bonds is ta:r exempt at the federal levelB. Earns a3Yordvtn after-tan@Would be indifferent between this bond and a municipal bond offering $7 annually per $100 of facevalue, assuming the same default riskD.

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