,1. Economic policy affects
a. only the amount of money in the economy.
b. only the lending policy of financial intermediaries.
c. the entire financial system.
d. how financial securities are traded and no other part of the financial system.
ANSWER: c
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
2. Which of the following is NOT a financial policymaker?
a. Securities and Exchange Commission (SEC)
b. Federal Deposit Insurance Corporation (FDIC)
c. Consumer Financial Protection Bureau (CFPB)
d. Federal Reserve System (the Fed)
ANSWER: c
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
3. Which policymaking institution determines the money supply, sets the rules for how checks are cleared and how
banks obtain new currency, and determines what activities banks may or may not engage in?
a. Treasury Department.
b. Commerce Department.
c. Securities and Exchange Commission.
d. Federal Reserve System.
ANSWER: d
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
,4. Earning interest on past interest is referred to as
a. present value.
b. super interest.
c. compounding.
d. discounting.
ANSWER: c
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
5. More than half of all U.S. dollars can be found
a. in foreign countries.
b. in the United States.
c. in the underground economy.
d. in bank vaults.
ANSWER: a
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
6. Americans should not worry about all the dollars held by foreigners because
a. most of the currency is reinvested into America.
b. taxes are lower as a result.
c. interest rates are lower as a result.
d. stock prices are higher as a result.
ANSWER: b
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
, 7. Interest rates on long-term loans are generally than interest rates on short-term loans, partly because
loans are riskier.
a. lower; short-term
b. lower; long-term
c. higher; long-term
d. higher; short-term
ANSWER: c
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
8. The expected rate of change in prices is known as the
a. forecasted mean CPI.
b. Okun's law coefficient.
c. augmented inflation rate.
d. expected inflation rate.
ANSWER: d
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
9. The nominal interest rate minus the expected inflation rate equals the
a. potential interest rate.
b. natural interest rate.
c. true interest rate.
d. real interest rate.
ANSWER: d
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
a. only the amount of money in the economy.
b. only the lending policy of financial intermediaries.
c. the entire financial system.
d. how financial securities are traded and no other part of the financial system.
ANSWER: c
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
2. Which of the following is NOT a financial policymaker?
a. Securities and Exchange Commission (SEC)
b. Federal Deposit Insurance Corporation (FDIC)
c. Consumer Financial Protection Bureau (CFPB)
d. Federal Reserve System (the Fed)
ANSWER: c
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
3. Which policymaking institution determines the money supply, sets the rules for how checks are cleared and how
banks obtain new currency, and determines what activities banks may or may not engage in?
a. Treasury Department.
b. Commerce Department.
c. Securities and Exchange Commission.
d. Federal Reserve System.
ANSWER: d
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
,4. Earning interest on past interest is referred to as
a. present value.
b. super interest.
c. compounding.
d. discounting.
ANSWER: c
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
5. More than half of all U.S. dollars can be found
a. in foreign countries.
b. in the United States.
c. in the underground economy.
d. in bank vaults.
ANSWER: a
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
6. Americans should not worry about all the dollars held by foreigners because
a. most of the currency is reinvested into America.
b. taxes are lower as a result.
c. interest rates are lower as a result.
d. stock prices are higher as a result.
ANSWER: b
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
, 7. Interest rates on long-term loans are generally than interest rates on short-term loans, partly because
loans are riskier.
a. lower; short-term
b. lower; long-term
c. higher; long-term
d. higher; short-term
ANSWER: c
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
8. The expected rate of change in prices is known as the
a. forecasted mean CPI.
b. Okun's law coefficient.
c. augmented inflation rate.
d. expected inflation rate.
ANSWER: d
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
9. The nominal interest rate minus the expected inflation rate equals the
a. potential interest rate.
b. natural interest rate.
c. true interest rate.
d. real interest rate.
ANSWER: d
POINTS: 1
DIFFICULTY: Basic
TOPICS: Introduction to Money and Banking
OTHER: Factual
