Question 1
Finance has its origins in:
economics and statistics
accounting and sociology
accounting and economics
psychology and mathematics
Question 2
If the interest rate is greater than 0%, then a dollar today is worth
more than a dollar tomorrow
the same as a dollar tomorrow
less than a dollar tomorrow
there is not sufficient information to tell
Question 3
Maximizing _____________________ is accomplished through effective financial planning and analysis, asset management, and the acquisition of financial capital.
the value of perquisites.
the owners’ wealth.
the firm’s profits
the firm’s earnings
Question 4
$1,000 invested today at 6% interest would be worth ________ one year from now
$1,600
$1,060
$1,160
$1,006
Question 5
An effective financial system needs which of the following:
an efficient monetary system
to be able to trade with other nations
markets in which to buy and sell goods and services
physical locations for markets
Question 6
In the United States, most money is created by:
depository institutions
the United States Treasury
capital markets
None of the above
Question 7
Economists use a ___________________ framework to explain how the prices and quantities of goods and services are determined in a free-market economic system.
opportunity
marginal cost
supply-and-demand
anti-monopoly
Question 8
The seven-member board of the Federal Reserve that sets monetary policy is called
the Federal Reserve Open Market Committee.
the Federal Reserve Board of Governors.
the Federal Reserve Advisory Committee.
the Federal Market Advisory Committee.
Question 9
Which monetary policy tool does the Fed use most infrequently?
changing reserve requirements
changing the discount rate
open market operations
changing the Fed Funds rate
Question 10
The least used monetary policy instrument used by the Fed is
open market operations
changing the discount rate
changing the reserve requirement
issuing treasury bills
Question 11
The most used monetary policy instrument used by the Fed is
open market operations.
changing the discount rate.
changing the reserve requirement.
issuing securities.
Question 12
The capital stock of each Federal Reserve Bank
is owned by the Board of Governors of the Fed.
can be used in an emergency to provide funds for the Fed.
is owned by members of the individual Federal Reserve Banks.
has been reserved for purchase of the U.S. Treasury.
Question 13
Under the authority of the Federal Reserve Act of 1913
all national and state-chartered banks must become members of the Fed.
only national banks were permitted to become members of the Fed.
state-chartered banks were permitted to withdraw from membership with the Fed.
a system of deposit insurance was created.
Question 14
Under the authority of the Federal Reserve Act of 1913
all national and state-chartered banks must become members of the Fed.
only national banks were permitted to become members of the Fed.
state-chartered banks were permitted to withdraw from membership with the Fed.
a system of deposit insurance was created.
Question 15
Which one of the following transactions or operations is entirely at the initiative of the Federal Reserve?
Open market operations
Change in float
Change in bank borrowings
Change in Treasury cash holdings
Question 16
When the United States Treasury makes a payment to an individual, it usually takes the form of a
check drawn on a Federal Reserve Bank.
check drawn directly against the U.S. Treasury.
special Treasury voucher.
check drawn against a bank in which tax balances are held.
Question 17
A country’s economic policy actions are directed toward which of the following goals?
No change in the GDP
High employment
Maintaining high inflation
Zero trade deficit or surplus
Question 18
Deposits that add new reserves to the bank where they are deposited are called
primary deposits.
derivative deposits.
secondary deposits.
Special Drawing Rights
Question 19
The U.S. Treasury is primarily responsible for
monetary policy.
debt management.
fiscal policy.
the money supply.
Question 20
The Federal Reserve System cannot directly control
Treasury security purchases by the public.
monetary base.
the size of the money supply.
commercial bank reserve requirements.