14. Insufficient capital to offset a sudden decline in the value of assets versus
liabilities is referred to as
a. sovereign b. liquidity risk. c. insolvency d. credit
15. Without any changes in the flow of funds or the level of funds at the banks, a
decrease in the reserve requirement will:
a. increase required reserves b. decrease excess reserves
c. increase excess reserves d. decrease total reserves.
Part Two: These questions refer to general information discussed in class, read in
various sources, or perhaps heard or read in the media; 10 questions, 3 points each.
[30 points total]
1. The $600 billion plan offered through the Federal Reserve to aid in the great
recession by bailing out failing institutions and stimulating the economy is
referred to as the:
a. QE2, Quiditch Experiment c. TARP, Troubled Asset Relief Program
b. QE2, Quantitative Easing d. Stimulus, American Recovery and Reinvestment
2. Any reference in any article or media that the central bank will directly finance
the government's deficit is referred to as:
a. familiarizing the debt c. universe expansion
b. monetarizing the debt d. Keynesian contractionism
3. In the news, the FED's intention to \"buy the equivalent of most of the new
Treasury debt issued\" is referred to as monetary policy:
a. defensive (action to maintain achievement of current goals)
b. offensive (action to change the direction of monetary policy)
c. reactionary (action taken without clear policy intentions stated)
d. precautionary (action in response to market action to prevent inflation)
