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Economic
Q:
Each of the following is classified as a thrift financial institution, except
a. commercial bank.
b. savings and loan association.
c. savings bank.
d. credit union.
e. All of the above are thrift institutions.
Q:
If a monopolist can sell 3 units at price of $150 per unit and 4 units at a price of $140 per unit, its marginal revenue at an output of 4 isA) $-10.00. B) $10.00. C) $560.00. D) $110.00.
Q:
Historically, credit unions were
a. organized during World War I to provide savings institutions to service personnel overseas.
b. organized with humanitarian goals.
c. founded to provide consumers with low-cost loans and encourage thrift for members.
d. first organized in the United States.
e. All of the above.
Q:
How is the market clearing price established in a perfectly competitive industry?
Q:
The major asset of savings and loans is
a. mortgage-backed securities.
b. construction loans.
c. residential (home) mortgages.
d. cash and investment accounts.
e. government securities.
Q:
Refer to the above figure. Which of the graphs represent the situation for a perfectly competitive industry?A) Panel A B) Panel B C) Panel C D) Panel D
Q:
If bank managers lobby to maintain America's traditional "dual banking" structure, they want
a. an option of either federal or state bank chartering.
b. to maintain the right to make loans and take deposits.
c. the right to fight competition.
d. the option of remaining a bank or a bank holding company.
e. All of the above.
Q:
In the above figure, if this firm produces output level Q2, it has average total costs ofA) OF. B) OE. C) OC. D) OD.
Q:
The maximum amount of FDIC deposit insurance per eligible deposit account is
a. $50,000
b. $100,000
c. $250,000
d. $500,000
e. greater than $1,000,000.
Q:
A share of stock in a corporation isA) a guarantee to a fixed amount of income from the corporation.B) a legal claim to a lump-sum payment at a specified point of time in the future.C) a legal claim to a dividend, regardless of the corporationʹs ability to pay its interest payments.D) a legal claim to a share of the companyʹs future profits.
Q:
The international banking market, in terms of size, is dominated by banks from
a. the United States.
b. Europe.
c. Bermuda.
d. Asia.
e. Canada.
Q:
The opportunity cost of capital isA) the rate of return realized on an investment.B) the rate of return that could be earned by the ownerʹs capital were it used elsewhere.C) the rate used to calculate a firmʹs tax liability.D) the rate of interest the government uses to calculate legal business tax penalties.
Q:
Most of the largest banks in the world are based in
a. the United States.
b. Japan.
c. the Cayman Islands.
d. Europe.
e. Bermuda.
Q:
Quantity of Hamburgers/WkTotal UtilityQuantity of Movies/WkTotal Utility14014002602700376385048649505915100069361025Refer to the above table. The price of a hamburger is $2, the price of a movie is $10, and the consumer has $44. What is the change in quantity demanded of hamburgers if the price of a hamburger decreases to $1?A) Quantity demanded increases by 1 hamburger.B) Quantity demanded increases by 2 hamburgers. C) Quantity demanded increases by 3 hamburgers. D) Quantity demanded increases by 4 hamburgers.
Q:
Unlike the United States, many countries grant their banks the authority for
a. full merchant banking, including investment banking and ownership of companies to which they lend.
b. deposit banking.
c. forming bank holding companies.
d. lending to foreign companies and countries.
e. All of the above.
Q:
The equation for the calculation of marginal utility isA) total utility/number of units consumed.B) change in total utility/number of units consumed.C) change in total utility/change in number of units consumed.D) total utility/change in number of units consumed.
Q:
Other things being equal, demand is less elasticA) the more expensive the good is.B) the smaller the percentage of a total budget that a family spends on a good. C) the longer is the time period for adjustment.D) the more substitutes a good has.
Q:
Which of the following is not an asset of a bank?
a. business deposits
b. consumer loans
c. deposits in other banks
d. government securities
e. All of the above are bank assets.
Q:
In order to correct the problems associated with external costs,A) the signals given to the economy must change so that decision -makers will take into account all the costs of their actions.B) the government must take over production of industries that are responsible for most of the pollution.C) standards must be established that make it illegal to pollute.D) the prices of all goods must be raised so people will consume less of the worldʹs resources.
Q:
An increase in depository institutions' reserves will cause
a. the Fed Funds rate to rise.
b. planned inventory investment to fall.
c. depository institutions to lend more freely.
d. foreign investors to buy more T-Bills.
e. None of the above.
Q:
All else equal, a decrease in reserve requirements will cause
a. state and local government expenditures to fall.
b. inflation expectations to fall.
c. an increase in the Fed Funds rate.
d. excess reserves to increase.
e. All of the above will occur.
Q:
Merit is judged by oneʹs ability to produceA) what is considered useful by society. B) what is considered valuable by society. C) what is considered beneficial to society. D) all of the above
Q:
The asset of Federal Reserve banks associated with open market operations is
a. Federal Reserve notes.
b. U.S. government securities.
c. loans to member banks.
d. float.
e. None of the above.
Q:
Marginal factor cost isA) the change in total costs due to a one -unit change in the quantity of the good produced. B) the change in total costs due to a one -unit increase in the variable input.C) the change in the price of an input when an additional unit of the input is hired.D) the marginal cost of changing the rate of production in the long run.
Q:
Which of the following powers or tools of Federal Reserve monetary policy has the greatest impact on the money supply?
a. discount rate
b. Regulation Q
c. open market operations
d. bank examination
e. All of the above have about the same impact.
Q:
Cost minimization suggests that two inputs should be employed to the point whereA) the marginal cost of each input is identical.B) the marginal revenue product of each input is identical.C) the marginal physical product per dollar spent on each input is identical. D) the extra contribution to physical output of the inputs is identical.
Q:
Most of the financial panics experienced by the United States in the past can be traced to the behavior of financial intermediaries who either took on too much risk or behaved unethically.
a. True
b. False
Q:
If the additional revenue from hiring an additional worker equals the additional costs from hiring the extra worker, then we know thatA) MFC = MPPL. B) MFC/MPPL = wage. C) MFC/MRPL = 1. D) MRPL/P = MFC.
Q:
The success of financial institutions in the future will depend on their ability to specialize and offer niche products to a narrow base of customers.
a. True
b. False
Q:
What is the lemons problem? How do firms try to address this problem?
Q:
In the Basel III Accord, 27 countries agreed to increase their banks' capital requirements in an effort to reduce the risk that mega bank failures will cause future financial crises.
a. True
b. False
Q:
A cartel isA) a group of producers that agree to set common prices and output quotas. B) a group of consumers that bid against each other for the same product.C) a government agency that regulates markets.D) an arbitrator to settle disputes between consumers and producers.
Q:
Because life insurance companies are able to invest in corporate bonds and stocks, they provide an important source of long-term funds for companies.
a. True
b. False
Q:
Explain why the amount that firms spend on advertising depends on the characteristics of their products.
Q:
In general, cash and marketable securities make up the largest percentage of commercial bank assets.
a. True
b. False
Q:
In a monopolistically competitive market, the consumer receives the benefit ofA) production at minimum average cost.B) production where price equals marginal cost. C) product diversity.D) allocative efficiency.
Q:
The liabilities of financial institutions primarily consist of loans.
a. True
b. False
Q:
If a monopolist can sell 2 units at price of $200 per unit and 3 units at a price of $180 per unit, its marginal revenue at an output of 3 isA) $-20.00. B) $80.00. C) $140.00. D) $180.00.
Q:
Financial intermediaries generally take deposits from many savers and loan all their funds to a single firm.
a. True
b. False
Q:
All of the following are true regarding perfectly competitive price determination EXCEPT A) the market price is determined by the interactions among all buyers (households) and firms.B) the individual firm takes the market price as given.C) the individual firm is known as a market price maker.D) the individual firmʹs marginal revenue curve is horizontal at the market price.
Q:
Individuals have greater expertise than financial intermediaries when it comes to gathering, verifying, and evaluating information concerning borrowers.
a. True
b. False
Q:
Refer to the above figure. The market supply and demand curves in a perfectly competitive market intersect at $4. Which of the graphs represent the situation for an individual firm?A) Panel A B) Panel B C) Panel C D) Panel D
Q:
In the above figure, if this firm produces output level Q2, it has average variable costs ofA) OF. B) OE. C) OC. D) OD.
Q:
Financial intermediaries allow savers to provide the funds directly to the borrowers.
a. True
b. False
Q:
When a firm uses profits to purchase new capital equipment, it is engaging inA) tax evasion.B) balance sheet accounting. C) reinvestment.D) the most risky way the firm can obtain investment funds.
Q:
Financial intermediaries are the end users of the funds that they get from those who wish save money for the future.
a. True
b. False
Q:
The percentage of financial assets held by individuals located in banks has doubled over the past thirty-five years.
a. True
b. False
Q:
The normal rate of return is theA) average rate of return earned in an industry at a given point in time.B) opportunity cost of capital.C) return on capital associated with zero accounting profits.D) the amount paid to an investor when the firm is an on -going concern.
Q:
Social Security is a fully funded insurance program.
a. True
b. False
Q:
Quantity of Hamburgers/WkTotal UtilityQuantity of Movies/WkTotal Utility14014002602700376385048649505915100069361025Refer to the above table. Suppose the price of a movie is $5 and the income of the consumer is $29. What are the quantities demanded of hamburger at prices of $2 and $1 respectively?A) 0; 1 B) 2; 4 C) 1; 2 D) 3; 5
Q:
Life insurance companies provide protection against death.
a. True
b. False
Q:
The change in total utility derived when a customer consumes one more unit of a good or service is calledA) total utility. B) marginal utility. C) average utility. D) final utility.
Q:
Credit unions were originally organized with the idea that consumers could pool their funds together and thereby make low-cost consumer loans to any members of the local community.
a. True
b. False
Q:
Which of the following would most likely exhibit the highest price elasticity of demand?A) Gasoline B) One particular brand of toothpasteC) Motor oil D) Salt
Q:
Savings and loan associations were established to provide commercial real estate financing.
a. True
b. False
Q:
If all firms had to bear all the social costs of their actions, we should observe marginal cost curves
A) of all firms shifting up.
B) of some firms shifting up, of some others shifting down, and of the rest not shifting at all.
C) of all firms that had generated externalities shifting up while there would be no change for the rest of the firms.
D) of some firms shifting up and of the rest shifting down.
Q:
The Federal Deposit Insurance Corporation (FDIC) approves and charters all federal, or national, banks and many state banks.
a. True
b. False
Q:
If an employer pays employees according to the volume of business revenue they individually generate, then the employer is applying theA) productivity standard. B) merit standard. C) contributive standard. D) all of the above
Q:
U.S. banks have been permitted to engage in a wider range of business activities in foreign countries than at home in order to be competitive with foreign banks.
a. True
b. False
Q:
The main difference between a monopsonist and a competitive buyer of labor is thatA) the competitor can hire as many workers as it wants at the going wage while a monopsonist can force wages down when hiring additional workers.B) the competitor can hire as many workers as it wants at the going wage while a monopsonist must raise wages to hire additional workers.C) the competitor is a small firm while the monopsonist is a large firm.D) the competitor is also a competitor in product markets while the monopsonist is also a monopoly in product markets.
Q:
Until the passage of the International Bank Act of 1978, foreign banks enjoyed substantial operating advantages over domestic banks.
a. True
b. False
Q:
To minimize total costs for a particular rate of output, a firm will equateA) the average cost of each factor.B) the marginal revenue of each factor.C) the marginal physical product per dollar spent on each factor.D) the marginal revenue product and variable marginal revenue for each factor.
Q:
U.S. bank regulators allow U.S. banks overseas to engage in all banking activities allowed by the host country.
a. True
b. False
Q:
If MFC < MRPL, the firm shouldA) hire more workers. B) lower wages.C) get rid of some capital. D) reduce the number of workers.
Q:
The Edge Act of 1919 permitted U.S. banks to create banking facilities in foreign countries that were regulated by the foreign government, not by the Federal Reserve.
a. True
b. False
Q:
What are the major rationales for consumer protection in nonmonopolistic industries?
Q:
In a cartel, participating members can cheat byA) letting more entrants join the cartel. B) leaving the industry.C) producing a lower production level than the cartel quota. D) charging a slightly lower price and raising production.
Q:
When the Federal Reserve sells an asset to the private sector, the money supply declines.
a. True
b. False
Q:
A decrease in reserve requirements should result in an increase in the total level of member bank reserves.
a. True
b. False
Q:
When a pharmaceutical company advertises that its allergy medication is clinically proven to alleviate hay fever symptoms, the pharmaceutical company is engaging inA) informational advertising. B) trademark protection. C) persuasive advertising. D) direct marketing.
Q:
The Federal Reserve is an independently funded federal agency of Congress, thus is independent of the political processes of Washington.
a. True
b. False
Q:
A good example of a monopolistic competitive industry isA) the federal highway system. B) oil producing industry.C) the rap music industry. D) farming.
Q:
When TR is increasing as a monopolistʹs output increases,A) MR is negative. B) MR is positive.C) MR = 0. D) MR may be positive or negative.
Q:
All else equal, the nation's money supply increases when the Federal Reserve purchases U.S. Treasury securities.
a. True
b. False
Q:
The Federal Reserve's most influential policy is its reserve requirement policy.
a. True
b. False
Q:
In a perfectly competitive market in which all firms are maximizing their economic profits, the demand and supply curves intersect at a price of $8. From this we know that each
A) firmʹs average total cost of producing the good is $8.
B) firmʹs average variable cost of producing the good is $8.
C) firmʹs marginal cost of producing the good is $8.
D) firm is earning positive economic profits at a price of $8 or more.
Q:
The maximum change in the money supply created by a fractional reserve banking system decreases whenever reserve requirements are increased.
a. True
b. False
Q:
The demand curve for the product of a perfectly competitive firm isA) perfectly elastic.B) perfectly inelastic.C) elastic at high prices and inelastic at low prices.D) identical to the elasticity of demand on the market demand curve.
Q:
The deposits of federal credit unions are insured by the Federal Deposit Insurance Corporation.
a. True
b. False
Q:
QTFCTVCTC0$90$ 0$ 901902511529032122390421324906415459095185Refer to the above table. MC is the lowestA) between 0 and 1 units of output. B) between 1 and 2 units of output.C) between 3 and 4 units of output. D) at 0 units of output.