Econ 3303 Exam 3 Questions With
Correct Answers
Credit car debit is: - CORRECT ANSWER✔✔-unsecured debt
| | | | | | |
When one party to a transaction has incentive to engage in activities
| | | | | | | | | | | |
detrimenatal to the other party, there exists a problem of - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-moral hazard |
In order to reduce the _______ problem in loan markets, bankers collect
| | | | | | | | | | |
|information from prospective borrowers to screen out the bad credit
| | | | | | | | | |
risk from the good ones. - CORRECT ANSWER✔✔-moral hazard
| | | | | | | |
The government institution that has responsibility for the amount of
| | | | | | | | | |
money and credit supplied in the economy as a whole is the - CORRECT
| | | | | | | | | | | | | |
ANSWER✔✔-central bank |
Overseeing who operates banks and how they are operated is called -
| | | | | | | | | | | |
CORRECT ANSWER✔✔-prudential supervision
| |
An essential characteristic of credit unions is that - CORRECT
| | | | | | | | | |
ANSWER✔✔-they are organized for individuals with a common bond | | | | | | | |
, During times of financial crisis, mark-to-market accounting - CORRECT
| | | | | | | | |
ANSWER✔✔-requires that financial firms' assets be marked down in | | | | | | | | |
value which can worsen the lending crisis
| | | | | |
The presence of ______ in financial markets leas to adverse selection
| | | | | | | | | | |
and moral hazard problem that interfere with efficient functioning
| | | | | | | | |
markets. - CORRECT ANSWER✔✔-asymmetric information
| | | |
One of the criticisms of Basel 2 is that it is procyclical. That means that -
| | | | | | | | | | | | | | | |
CORRECT ANSWER✔✔-banks may be required to hold more capital
| | | | | | | | |
during times when capital is short
| | | | |
The __________ problem helps to explain why the private producution
| | | | | | | | | |
and sale of information cannot eliminate - CORRECT ANSWER✔✔-free-
| | | | | | | |
rider; adverse selection
| |
Lenders prefer to lend to firms with high net worth because - CORRECT
| | | | | | | | | | | | |
ANSWER✔✔-the owners of such firms have more to lose if the firm | | | | | | | | | | | |
defaults on a loan | | |
Which of the following statements concerning bank regulation in the
| | | | | | | | | |
United States is TRUE? - CORRECT ANSWER✔✔-The Federal Reserve
| | | | | | | | |
and the state banking authority jointly have responsibility for the state
| | | | | | | | | | |
banks that are members of the Federal Reserve System.
| | | | | | | |
Correct Answers
Credit car debit is: - CORRECT ANSWER✔✔-unsecured debt
| | | | | | |
When one party to a transaction has incentive to engage in activities
| | | | | | | | | | | |
detrimenatal to the other party, there exists a problem of - CORRECT
| | | | | | | | | | | |
ANSWER✔✔-moral hazard |
In order to reduce the _______ problem in loan markets, bankers collect
| | | | | | | | | | |
|information from prospective borrowers to screen out the bad credit
| | | | | | | | | |
risk from the good ones. - CORRECT ANSWER✔✔-moral hazard
| | | | | | | |
The government institution that has responsibility for the amount of
| | | | | | | | | |
money and credit supplied in the economy as a whole is the - CORRECT
| | | | | | | | | | | | | |
ANSWER✔✔-central bank |
Overseeing who operates banks and how they are operated is called -
| | | | | | | | | | | |
CORRECT ANSWER✔✔-prudential supervision
| |
An essential characteristic of credit unions is that - CORRECT
| | | | | | | | | |
ANSWER✔✔-they are organized for individuals with a common bond | | | | | | | |
, During times of financial crisis, mark-to-market accounting - CORRECT
| | | | | | | | |
ANSWER✔✔-requires that financial firms' assets be marked down in | | | | | | | | |
value which can worsen the lending crisis
| | | | | |
The presence of ______ in financial markets leas to adverse selection
| | | | | | | | | | |
and moral hazard problem that interfere with efficient functioning
| | | | | | | | |
markets. - CORRECT ANSWER✔✔-asymmetric information
| | | |
One of the criticisms of Basel 2 is that it is procyclical. That means that -
| | | | | | | | | | | | | | | |
CORRECT ANSWER✔✔-banks may be required to hold more capital
| | | | | | | | |
during times when capital is short
| | | | |
The __________ problem helps to explain why the private producution
| | | | | | | | | |
and sale of information cannot eliminate - CORRECT ANSWER✔✔-free-
| | | | | | | |
rider; adverse selection
| |
Lenders prefer to lend to firms with high net worth because - CORRECT
| | | | | | | | | | | | |
ANSWER✔✔-the owners of such firms have more to lose if the firm | | | | | | | | | | | |
defaults on a loan | | |
Which of the following statements concerning bank regulation in the
| | | | | | | | | |
United States is TRUE? - CORRECT ANSWER✔✔-The Federal Reserve
| | | | | | | | |
and the state banking authority jointly have responsibility for the state
| | | | | | | | | | |
banks that are members of the Federal Reserve System.
| | | | | | | |
