1) The primary reason for the creation of the Federal Reserve System was
(a) the desire to reduce or eliminate bank panics.
(b) the desire to stabilize short-term interest rates.
(c) the desire to eliminate state-chartered banks.
(d) the desire to create a means to finance World War I.
(e) the desire to increase the demand for government bonds.
2) Overly expansionary monetary policy
(a) leads to high inflation.
(b) decreases the efficiency of the economy.
(c) hampers economic growth.
(d) does all of the above.
does only (a) and (b) of the above
3) Exchange-rate targeting has the disadvantage that
(a) countries lose the ability to pursue a monetary policy that differs from the anchor country.
(b) countries are open to speculative attacks on its currency, especially if unemployment rises.
(c) shocks are transmitted from the anchor country to the domestic economy.
(d) all of the above occur.
(e) only (a) and (b) of the above occur.
4) Which of the following are true statements?
(a) Wealth is the total collection of pieces of property that are a store of value.
(b) Money is a stock; it is a certain amount at a given point in time. (c) Income is a flow of earnings per unit of time.
(d) All of the above are true.
(e) Only (a) and (b) of the above are true.
5) Regulation of the financial system
(a) occurs only in the United States.
(b) protects the jobs of employees of financial institutions.
(c) protects the wealth of owners of financial institutions.
(d) ensures the stability of the financial system(e) does all of the above.
6) The predominant form of household debt is
(a) consumer installment debt.
(b) collateralized debt.
(c) unsecured debt.
(d) none of the above