Which of the following explains why mortgages weren't considered securities prior to 1970?
A) The Federal Reserve Act of 1913 prohibited mortgages from being considered securities. An amendment to the Act was approved in 1970 that allowed mortgages to be considered securities.
B) Prior to 1970, mortgages were rarely resold in the secondary market.
C) Until 1970, the average annual increase in housing prices did not allow the buying and selling of mortgages to be profitable. There has been a significant annual increase in housing prices and mortgage values since 1970.
D) Congress passed a law in 1970 stipulating that mortgages could be classified as securities.
B
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If GDP is too low relative to potential GDP, which of the following is true?
A. Unemployment is higher than normal. B. A recession has just begun. C. Inflation is higher than normal. D. Deflation will occur.
Under the gold standard, a nation with a balance of payments deficit would experience a gold:
A. inflow and an increase in its money supply. B. inflow and a reduction in its money supply. C. outflow and an increase in its money supply. D. outflow and a reduction in its money supply.
Owners of a corporation share in the profits of the firm
A) by selling any bonds or stocks owned and realizing a capital gain. B) through coupon payments on that firm's bonds. C) through dividend payments on shares of that firm's stock. D) by raising the interest rate on bonds.
Which of the following statements about the financing of international trade is correct?
A. International trade means the trading of financial assets for foreign exchange B. Most international transactions are made with gold C. Imports are more important than exports to the economy of a nation D. Exports provide the foreign currencies needed to pay for imports