1. To prevent financial crisis, the central bank lowers the _______, which should _______

A. target interest rate, raise aggregate expenditure B. inflation taget; increase the interest rate C. money supply; raise household confidence D. amount of money covered by deposit insurance; reduce moral hazard

2. The high ______ set by Central Bank of Argentina in the 1990s led to rapid ________ of the Argentine real rate and a _______ in net exports

A. tax rate; depreciation; rise

B. inflation target rate; appreciation; rise

C. money growth rate; depreciation; fall

D. nominal interest rate; appriciation ; fall

3. During the financial crisis, many borrowers defaulted on their loans and put many institutions at risk of failure. Policymakers could prevent failure by:

A. Selling their shares in the institution B. requiring the bank to reduce its reserve C. lending to the institution and purchasing its stock D. policymakers cannot prevent institutions from failing

4. Unlike the financial crisis in the great depression in the 1920s and 1930s when the Fed ____, during the financial crisis of 2007-2009, the Fed ______

A. increased the money supply; reduced the money supply B. acted too late; acted too early C. reacted passively; reacted aggressively D. reacted aggressively, reacted passively

5. To restrict risk taking by banks, regulators

A. Encourage banks to have deposited insurance B. enforce capital requirement C. guarantee no interest loans to low-risk banks D. None of this answer is correct