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.

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