Weekly Review Quiz As of 2008-02-28

Weekly Review Quiz as of 2008-02-28
Economics:Macro

Decline in Home Prices Accelerates
by Kelly Evans, Serena Ng and Ruth Simon
02/27/2008

1. The two reasons why mortgage rates have not responded more to Fed rate cuts are:

a) The demand for mortgages remains high while the supply has been reduced because of tightening credit markets.
b) demand for mortgages remains low but supply has been reduced by tightening credit markets.
c) expected inflation has declined while investors and banks have become increasingly reluctant to make home loans.
* d) expected inflation has increased while investors and banks have become increasingly reluctant to make home loans.
e) expected inflation has increased while investors and banks have become increasingly willing to make home loans.

2. Economists agree that the key to stabilizing home prices is

a) the government buying up the excess supply of houses.
b) the Fed continuing to reduce interest rates.
c) a further drop in the value of the dollar.
d) Congress making tax cuts permanent.
* e) working off the huge inventory of unsold homes.

U.S. Weighs Sanctions On Iran's Central Bank
by Glenn R. Simpson
02/25/2008

3. A key difference between Iran's central bank and the U.S. Federal Reserve is

a) Iran's central bank has an inflation target while the Fed does not.
b) the Fed has an inflation target while Iran's central bank does not.
c) Iran's central bank is independent while the Fed is not.
* d) the Fed is independent while Iran's central bank is not.
e) Iran's central bank is in charge of managing the money supply while the Fed is not.

Paulson Dismisses Mortgage Rescue Plans
by Michael M. Phillips and Greg Ip
02/28/2008

4. The centerpiece of the administration's approach to the housing crisis is to

* a) encourage the mortgage industry to voluntarily ease up on certain borrowers.
b) require the mortgage industry to ease up on certain borrowers.
c) pay off the mortgages for low-income borrowers.
d) allow bankruptcy judges to alter the terms of some mortgages in foreclosure.
e) allow thousands of additional borrowers to qualify for loans backed by the Federal Housing Administration.

5. At a House hearing yesterday, Federal Reserve Chairman Ben Bernanke

a) sent a strong signal that the Fed will keep interest rates unchanged for the foreseeable future.
b) hinted that the Fed will start raising rates because inflation pressures have eased.
c) hinted that the Fed will start raising rates because inflation pressures have intensified
d) kept the door open for further rate cuts because inflation pressures have eased.
* e) kept the door open for further rate cuts even though inflation pressures have intensified.