AExam1-10

AExam1-10 - EC 1500 Exam 1Fall 2010Answer Key 1. (6 points)...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
EC 1500 Exam 1—Fall 2010—Answer Key 1. (6 points) Why were Fannie Mae and Freddie Mac (GSE) able to issue so much debt? Because their debt was perceived as government guaranteed, or Because their bonds were regarded as safe as Treasury bonds 2. (8 points) In comparing a securitization regime versus a relationship-based banking regime, explain what two incentives change and why . Incentive to screen loans: declines in a securitization regime because loans are not held on the banks’ books but re-packaged to be sold Incentive to monitor loan performance: declines in a securitization regime because loans are securitized and sold 3. (8 points) According to Bernanke, what are the main problems with a proactive monetary policy approach to asset bubbles, that is, a monetary policy that tries to prevent bubbles? The Fed cannot identify asset market bubbles 4. (6 points) Choose the most correct answer: a. Fannie and Freddie securitized mortgages b. Fannie and Freddie participated in securitization but not in the sub-prime market c. Fannie and Freddie bought and sold sub-prime mortgages d. Both a and c e. Fannie and Freddie borrowed extensively from the Fed prior to 2007 5. (6 points) Howitt & Weil’s Economic Growth article discusses factors that determine the productivity of
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

AExam1-10 - EC 1500 Exam 1Fall 2010Answer Key 1. (6 points)...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online