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Unformatted text preview: ECON 133 Summer 2009 Quiz 2 : August 10 Name: & & & & & & & & & & & & & & & SID: & & & & & & & & & & & & & & & Score: & & & & & & & & & & & & & & & 1. (3 points) Bank Runs and Fractional Banking& Which of the following statements is NOT correct? (a) Deposits are liabilities to banks. (b) The Fed should raise a bank¡s reserve requirement when there are rumors about its deteriorating ¢nancial health. (c) With fractional banking, bank runs happen because banks do not have adequate amounts of reserves available for withdrawals. (d) Moral hazard happens with deposit insurance because depositors, without worrying bank failures, £ock to high-interest-paying banks which might be conducting risky lending. ANS: (b) 2. (3 points) Money Supply& The Fed suddenly increases money supply by buying Treasury bonds in the open market. What is the LEAST possible outcome on the market interest rate? (a) According to the income e/ect, the demand for money will increase and the interest rate will rise. (b) According to the price expectations e/ect, the demand for money will increase and the interest rate will rise. (c) According to the liquidity e/ect, the interest rate will rise. ANS: (c) 3. (3 points) Real Estate Market& Which of the following statements is NOT correct? (a) Only accredited investors, who have assets more than one million dollars and annual income in excess of $200,000, can purchase REITs. (b) In a declining housing market, loan-to-value ratio tends to increase. (c) REITs must have more than 75% of their assets invested in real estate....
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This note was uploaded on 04/07/2010 for the course ECON 133 taught by Professor Chen during the Summer '09 term at University of California, Santa Cruz.
- Summer '09