From September 2007 to April 2008 the Fed lowered the federal funds rate from 5.25 percent to 2 percent in a series of steps. The Fed's actions were largely in response to:
A. threats to the financial system from the mortgage default crisis.
B. forecasts of higher inflation rates.
C. Chinese refusal to allow their exchange rate to reflect market conditions.
D. pressure from the president to offset contractionary effects of a tax increase.
A. threats to the financial system from the mortgage default crisis.
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Which of the following is an example of money?
A) currency inside the banks B) currency in your wallet C) credit card used as a payment for a good or service D) a debit card E) checks written as payment for a good or service
The gap between potential GDP and real GDP had been as large as 7 percent during the worst of the 2007-2009 recession. By 2015, the gap
A) was positive, with real GDP exceeding potential GDP. B) had been eliminated. C) was still nearly 3 percent. D) remained at 7 percent.
From 1983-2015, net exports for the United States
A) were negative. B) increased as exports rose above imports. C) grew and then declined. D) were positive.
The Paradox of Financial Innovation states that:
a. What once was thought of as a "financial innovation" is really just old wine in a new bottle (i.e., nothing new). b.When a single firm, in isolation, tries to de-lever its balance sheet, the net effect is often for its leverage to rise. c. Financial innovation is a puzzle (i.e., a paradox) and always will be. d. When a large portion of the market tries to de-lever its balance sheet, asset prices fall, thereby causing leverage to increase (not decrease). e. If not fully understood by users and regulators, financial instruments that were created to reduce risk can end up increasing them.