Local banks could pass the risk involved in holding mortgage debts on to an investor with a higher risk tolerance using:
A. mortgage-backed securities.
B. leveraged securities.
C. leveraged investments.
D. government-backed securities.
A. mortgage-backed securities.
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The quantity theory of money implies that:
A) inflation is equal to the gap between the growth rate of money supply and the current real interest rates. B) inflation is equal to the gap between the growth rate of money supply and the growth rate of nominal GDP. C) inflation is equal to the gap between the growth rate of money supply and the current nominal interest rates. D) inflation is equal to the gap between the growth rate of money supply and the growth rate of real GDP.
If the Fed sells a T-bill to an individual rather than to a commercial bank, how will this affect the money supply?
A. It will increase the money supply. B. It will increase the checking account balance of the individual. C. It will have no effect on the money supply. D. It will decrease the money supply.
Suppose you have a choice between receiving a lump-sum payment of $10,000 today or four annual payments of $2,750 (with the first payment today). Of the following, which is the highest annual interest rate at which you would prefer the four annual payments over the lump-sum payment?
a. 2% b. 5% c. 7% d. 10%
Which of the following is true about the U.S. economy from 1992 to 1999?
A. It experienced sluggish growth in GDP most years. B. It had the lowest unemployment levels of the century. C. It performed above average based on most measures. D. It experienced zero inflation most years.