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Question # 4 of 20 ( Start time: 08:04:44

Total Marks: 1
PM )
The monetary liabilities of the Federal Reserve include:

Select correct option:

Government securities and discount loans

Currency in circulation and reserves

Government securities and reserves

Currency in circulation and reserves

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Question # 5 of 20 ( Start time: 08:06:12

Total Marks: 1
PM )
Banking is risky because __________.

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Depository institutions are highly leveraged

Banks do in all the lines of banking trades

Banks pay less for the deposits

All of the given options

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Currency-to-deposit ratio is a factor that affects the quantity of money. This factor is
controlled by which of the following?

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Central bank

Bank regulators

Commercial banks

Non bank public

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Question # 7 of 20 ( Start time: 08:07:59
Total Marks: 1
PM )
One argument for an independent central bank is:

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Without independence competent people would not take a position in a central bank

Successful monetary policy requires a long time horizon usually well beyond the next
election of most public officials

Politicians have a long-run focus that is not well tuned to addressing economic
problems

Central bankers have a short run focus that usually corrects problems faster

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Question # 8 of 20 ( Start time: 08:09:21

Total Marks: 1
PM )
Liquidity is the risk that is arises as a result of which one of the following consequences?

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It arises when loan is not repaid

It arises because of sudden demands of funds

It arises when two sides of the balance sheet do not match up

It arises when banks make additional profit by using derivatives

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Question # 11 of 20 ( Start time:

Total Marks: 1
08:12:08 PM )
Which of the following type/s of transaction/s affect the balance sheets of both the central
bank and the banking system?

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An open market operation

A foreign exchange intervention

Central bank’s extension of a discount loan

All of the given options

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Question # 13 of 20 ( Start time:

Total Marks: 1
08:13:38 PM )
If a member of the non-bank public purchases a government bond from the Fed with currency:

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Reserves will fall

The monetary base will fall

Reserves will remain unchanged

Monetary base will fall and reserves will remain unchanged

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Question # 14 of 20 ( Start time:

Total Marks: 1
08:15:03 PM )
Which one of the following is NOT true for the expectation hypothesis?

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Risk free interest rate can be computed

There is uncertainty in the future

Identifying yield of bond today that will be available next year

It focuses on risk free interest rate and the risk premium

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Question # 16 of 20 ( Start time:

Total Marks: 1
08:17:55 PM )
One thing that is true about economic policy in the U.S. is:

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Monetary and Fiscal policy often times conflict

Fiscal and monetary policy never conflict

Monetary policy ultimately controls fiscal policy since the Fed controls the money
supply

Fiscal policy ultimately controls monetary policy since Congress can control the Fed's
budget
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Question # 17 of 20 ( Start time:

Total Marks: 1
08:19:18 PM )
The Segmented Markets Theory of term structure suggests that:

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Investors have strong preferences for bonds of a particular maturity

Investors have no preference for short-term bonds over long-term bonds, or vice
versa

Interest rates on long-term bonds strongly influence the demand for short-term bonds

Bonds of different maturities are perfect substitutes for each other

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Question # 19 of 20 ( Start time:

Total Marks: 1
08:21:23 PM )
The reason for the government to get involved in the financial system is to:

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Protect investors

Ensure the stability of the financial system

Protect bank customers from monopolistic exploitation

All of the given options

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