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This test consists of 15 multiple choice questions and 5 short answer questions.

Multiple Choice Questions

1. Who appointed Alan Greenspan as the Federal Reserve chairman?
(a) George W. Bush.
(b) Ronald Reagan.
(c) Bill Clinton.
(d) George H. Bush.

2. In 2002, less than how much worth of subprime loans was approved?
(a) $1 billion.
(b) $300 million.
(c) $200 billion.
(d) $100 billion.

3. In finance, what occurs whenever the loan payment for any period is less than the interest charged over that period so that the outstanding balance of the loan increases?
(a) Inverted amortization.
(b) Positive securitization.
(c) Negative amortization.
(d) Negative securitization.

4. In what year did Alan Greenspan earn his M.A. degree in economics?
(a) 1970.
(b) 1954.
(c) 1965.
(d) 1950.

5. Alongside what Presidential nominee did Sarah Palin run as Vice President of the United States?
(a) George W. Bush.
(b) Hillary Clinton.
(c) Barack Obama.
(d) John McCain.

6. Before declaring bankruptcy, Lehman Brothers Holdings Inc. was ranked as the _________ largest investment bank in the United States.
(a) Second.
(b) Fourth.
(c) First.
(d) Third.

7. Who is the protagonist of The Fountainhead?
(a) John Gatsby.
(b) Dagny Taggart.
(c) Howard Roark.
(d) Sarah Anderson.

8. During what years was Ronald Reagan President of the United States?
(a) 1979-1985.
(b) 1982-1990.
(c) 1981-1989.
(d) 1971-1978.

9. T-Bills mature in what time?
(a) 10 years or less.
(b) 2 years.
(c) 5 years or more.
(d) 1 year or less.

10. When did Lehman Brothers declare bankruptcy?
(a) September, 2008.
(b) November, 2007.
(c) October, 2008.
(d) September 2009.

11. By 2005, there was over how much money in subprime loans approved?
(a) $600 billion.
(b) $500 billion.
(c) $800 billion.
(d) $300 million.

12. In Chapter 3, what process in which loans are split up and sold off to secondary investors as securities was used by banks?
(a) Securitization.
(b) Authorization.
(c) Amortization.
(d) Derivatives.

13. Who is the protagonist of Atlas Shrugged?
(a) Howard Roark.
(b) Michael Williams.
(c) Dagny Taggart.
(d) James Edwards.

14. According to the author, the Tea Party believes that the economy is self-correcting as long as commerce and _______ are separated.
(a) Socialism.
(b) Government.
(c) Business.
(d) Derivatives.

15. The protagonist of The Fountainhead is in what profession?
(a) Doctor.
(b) Engineer.
(c) Architect.
(d) Banker.

Short Answer Questions

1. What do T-Bills refer to?

2. Alan Greenspan recommended the Reagan era increase in Social Security tax, and the rate went from 9.35% to ___________.

3. The fundamental belief of what philosophy is that self-interest is a normal human state and interventionism by the government is unnatural and evil?

4. What refers to trade in high volumes at prices that are considerably at variance with intrinsic values?

5. According to the author, many loans were _____ meaning there was no documentation that confirmed their qualifications for the loans.

(see the answer keys)

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