Macroeconomics, 6e (Blanchard/Johnson) Chapter 9: The Crisis
9.1 Multiple Choice Questions
1) The Case-Shiller index is normalized to equal 100 in January A) 1999. B) 1990. C) 2000. D) 2001. Answer: C Diff: 1
2) The Case-Shiller index reached its peak in A) 2006. B) 2007. C) 2005. D) 2008. Answer: A Diff: 1
3) By 2006, about ________ of all U.S mortgages were subprimes. A) 10% B) 20% C) 30% D) 25% Answer: B Diff: 1
4) The mortgage is said to be underwater when
A) the value of the house exceeds the value of the mortgage. B) the house is flooded.
C) the value of the mortgage exceeds the value of the house. D) none of the above Answer: C Diff: 1
5) In mid-2008, estimated losses on mortgages were estimated to be about ________ of U.S. GDP. A) 2% B) 5% C) 7% D) 9%
Answer: A Diff: 1
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6) Which of the followings is NOT a bank's assets? A) reserves B) loans
C) government bonds D) checkable deposits Answer: D Diff: 1
7) Suppose bank A has assets of 100, liabilities of 80, and capital of 20. Its capital ratio is A) 20%. B) 25%. C) 11%. D) 10%. Answer: A Diff: 1
8) Suppose bank A has assets of 100, liabilities of 80, and capital of 20. Its leverage ratio is A) 4. B) 5. C) 10. D) 9.
Answer: B Diff: 1
9) Suppose bank A has assets of 100, liabilities of 60, and capital of 40. Its capital ratio is A) 40%. B) 66%. C) 25%. D) 60%. Answer: A Diff: 1
10) Suppose bank A has assets of 100, liabilities of 60, and capital of 40. Its leverage ratio is A) 1.5. B) 2.5. C) 0.6. D) 0.4.
Answer: B Diff: 1
11) The first structured investment vehicle (SIV) was set up by ________ in 1988. A) J.P. Morgan B) Chase C) Citigroup
D) Goldman Sachs Answer: C Diff: 1
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12) AIG provide CDS against A) insolvency. B) default risk. C) illiquidity.
D) none of the above Answer: B Diff: 1
13) Securitization can NOT help financial intermediaries A) diversify their portfolios. B) avoid bankruptcy.
C) attract more investors to buy and hold their securities. D) decrease the cost of borrowing. Answer: B Diff: 1
14) Collaterailzed debt obligations (CDOs) were first issued in A) 1980s. B) 1990s. C) 2000. D) 2001. Answer: A Diff: 1
15) Ted spread is
A) the difference between the riskless rate and the rate at which banks are willing to lend to each other.
B) the difference between the riskless rate and the yield on corporate bonds. C) the difference between the riskless rate and return on stocks. D) none of the above Answer: A Diff: 1
16) FDIC deposit insurance is ________ per account. A) $100,000 B) $150,000 C) $200,000 D) $250,000 Answer: D Diff: 1
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