Module 7 Flashcards
Which of the following economic activities represents an example of monetary policy?
1 The discount rate is increased.
2 Congress passes a tax cut.
3 Bank reserve requirements are lowered by the Federal Reserve.
4 The Federal Open Market Committee sells securities.
1, 3, 4
The Federal Reserve can take all of the following actions if it wants to follow a restrictive monetary policy except
A) lower income tax rates. B) raise the discount rate. C) raise the reserve requirement. D) sell government securities.
A
Which of the following is NOT characteristic of the Consumer Credit Reporting Act?
A)
Applicants who are denied credit must be offered the reason.
B)
Protection against unauthorized credit card use is provided.
C)
Access to a credit file is limited to bona fide users of financial information.
D)
Credit bureau reports must include accurate, relevant, and recent information.
B
Under the laws of most states, which of the following is exempt from creditors in a Chapter 7 bankruptcy?
A) Student loan proceeds B) A home, regardless of value C) Recent federal income taxes due D) Pension benefits
D
Which of the following is a provision of the Bankruptcy Act of 2005?
Debtors who want to file for Chapter 7 bankruptcy are first required to submit to credit counseling. Individuals who have the ability to pay their debts are required to file under Chapter 7 of the Federal Bankruptcy Code. A) I only B) Neither I nor II C) Both I and II D) II only
A
Which of these might cause an increase in supply?
A decrease in productivity
Fewer sellers in the marketplace
More efficient technology
A decrease in government subsidies
More efficient technology
The demand curve shows that
A)
demand for a product varies inversely with price.
B)
there is a direct relationship between changing prices and total receipts.
C)
the relative change in price is caused by changes in demand.
D)
consumers select alternative ways of spending income.
A)
demand for a product varies inversely with price.
Which of the following occurs when the price of a product decreases and consumers buy more of that product?
A) An increase in supply has occurred. B) A change in quantity demanded has taken place. C) The product is a complementary product. D) A change in inelastic demand has taken place.
B)
A change in quantity demanded has taken place.
Which of the following interest rates is directly controlled by the Federal Reserve Board?
A) Reserve rate B) Federal funds rate C) Discount rate D) Prime rate
C)
Discount rate
Which of the following best describes deflation?
A)
Prices are falling in absolute terms, bond prices rise, and purchasing power increases
B)
Indicates a decline in the rate of inflation
C)
Occurs when inflation and unemployment rise and the general growth of the economy is slow as business output falls
D)
A decline in the general price level and is often caused by an increase in the money supply and consumer demand
A)
Prices are falling in absolute terms, bond prices rise, and purchasing power increases
Purposes of the Federal Reserve include
1 establishing the prime rate.
2 influencing and monitoring the flow of capital.
3 establishing federal income tax rates.
4 maintaining steady economic growth with moderate inflation.
2 & 4
Which of the following statements regarding supply is CORRECT?
1 Generally, the higher the price that can be obtained, the higher the quantity supplied.
2 The supply curve is usually represented as sloping downward from left to right.
1 Generally, the higher the price that can be obtained, the higher the quantity supplied.
The Fair Debt Collection Practices Act does not allow debt collectors to engage in all of the following practices except
A)
contacting a debtor at his place of employment if the employer objects.
B)
seeking a court order for wage garnishment to satisfy a legal judgment.
C)
harassing or intimidating a debtor or using false and misleading approaches.
D)
contacting third parties about the payment of the debt without court authorization.
B)
seeking a court order for wage garnishment to satisfy a legal judgment.
Which of the following are methods of protecting against identify theft?
Monitoring bank accounts
Regularly inspecting credit reports
Reviewing financial and billing statements
Closing accounts that appear to have suspicious activity
ALL OF ABOVE
Recently, Congress has been pursuing deficit spending policies. In addition, the Federal Reserve is considering decreasing the discount rate and entering the open market to purchase existing Treasury securities. If these alternatives are pursued, what is the likely effect, if any, on the amount of bank loans?
A) Lending activity will decrease. B) Disintermediation will occur such that investors will seek other sources of funds. C) Lending activity will increase. D) These actions will cause no impact on the amount of bank loans.
C)
Lending activity will increase.
If the Consumer Price Index (CPI) is down but consumer demand is up, the economy is likely in which stage of the business cycle?
A) Peak to contraction B) Recovery to trough C) Contraction to trough D) Recovery to expansion
D)
Recovery to expansion
Deflation is
1 characterized by rising unemployment.
2 caused by a reduction in the money supply.
3 the opposite of inflation.
4 a decline in the rate of inflation.
1, 2, 3
Landry Plumbing, Inc., filed for bankruptcy under the reorganization provisions of Chapter 11 of the Federal Bankruptcy Code. A plan of reorganization was confirmed, and a final decree closing the proceedings was entered. Which of the following statements is CORRECT?
A)
Landry Plumbing, Inc., will not be allowed to continue in the same business.
B)
A trustee will continue to operate the debtor’s business.
C)
Landry Plumbing, Inc., will have negotiated with all creditors, except as otherwise provided in the plan and applicable law.
D)
Landry Plumbing, Inc., will now be liquidated.
Landry Plumbing, Inc., will have negotiated with all creditors, except as otherwise provided in the plan and applicable law.
All of the following economic activities represent government fiscal policy except
A) increasing marginal income tax rates. B) cutting the discount rate. C) reducing marginal income tax rates. D) increase purchases of goods and services.
B)
cutting the discount rate.
Which of the following statements regarding demand is CORRECT?
1 Generally, the higher the price level, the lower the level of demand.
2 The demand curve is usually represented as sloping upward from left to right.
1 Generally, the higher the price level, the lower the level of demand.
Which of these describes why changes in supply occur?
Changes in the cost of inputs
Changes in productivity
Changes in technology
Changes in taxes
ALL OF ABOVE
Which of the following best describes stagflation?
A)
Indicates a decline in the rate of inflation
B)
Denotes an increase in the general level of prices
C)
Occurs when inflation and unemployment rise and the general growth of the economy is slow as business output falls
D)
A decline in the general price level and is often caused by a reduction in the money supply and consumer demand
C)
Occurs when inflation and unemployment rise and the general growth of the economy is slow as business output falls
Which of the following confirms the current state of the economy?
A) Housing starts B) Orders for durable goods C) Unemployment rate D) Changes in investor sentiment
C)
Unemployment rate
If the demand for an item changes greatly when its price changes, the item is considered
A) elastic. B) inelastic. C) disinflated. D) at equilibrium.
A)
elastic.
