1			You are planning to buy a one year government bond with a principal of $1,000 and an annual coupon rate of 7%. The prevailing interest rate is 5%. How much would you be willing to pay for the bond?
			A)	$981.31
			B)	$1,000
			C)	$1,019.05
			D)	$1,070
2			You are planning to buy a stock for which the estimated dividend is $2 in one year, and the selling price of the stock in one year is estimated to amount to $100. If you plan on selling the stock in one year, and the prevailing interest rate is 4%, how much you would you be willing to pay for the stock?
			A)	$96.15
			B)	$98.08
			C)	$100
			D)	$102
3			A variety of financial assets sold to the public as shares in a single financial intermediary is known as:
			A)	Diversification
			B)	Bond
			C)	Stock
			D)	Mutual Fund
4			The fact that money can be used to measure and compare the value of goods and services refers to the use of money as a:
			A)	Medium of exchange
			B)	Unit of account
			C)	Store of value
			D)	None of the above

Use the following information for a hypothetical economy to answer questions 5 and 6:

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5			What is the value of M1?
			A)	$2,150
			B)	$2,550
			C)	$5,300
			D)	$7,930
6			What is the value of M2?
			A)	$2,150
			B)	$2,550
			C)	$5,300
			D)	$7,930
7			Suppose a bank has a 12 percent reserve requirement, $10,000 in deposits, and has loaned out all it can given the reserve requirement.
			A)	It has $120 in reserves and $9,880 in loans
			B)	It has $1,000 in reserves and $9,000 in loans
			C)	It has $1,200 in reserves and $8,800 in loans
			D)	None of the above is correct
8			Suppose a bank has $20,000 in deposits and $15,000 in loans. It has loaned out all it can. It has a reserve ratio of:
			A)	2.5%
			B)	20%
			C)	25%
			D)	60%
9			Suppose the banking system currently has $500 billion in reserves, the reserve requirement is 10%, and that $10 billion of the reserves are excess reserves that will not be lent out. What is the value of deposits?
			A)	$4,900 billion
			B)	$4,950 billion
			C)	$4,990 billion
			D)	$5,000 billion
10			If a hypothetical economy holds $800,000 in currency, and deposits the same amount in a bank that has a reserve-deposit ratio of 10%, the money supply will amount to:
			A)	$800,000
			B)	$1,600,000
			C)	$8,000,000
			D)	$8,800,000
11			An open market sale results in:
			A)	A decrease in reserves and a decrease in money supply
			B)	An increase in reserves and an increase in money supply
			C)	A decrease in reserves and an increase in money supply
			D)	An increase in reserves and a decrease in money supply
12			Suppose money supply grew by 3% and the velocity of money grew by 4%. If real GDP grew by 2%, then this means that the price level changed by:
			A)	4%
			B)	6%
			C)	-4%
			D)	-6%
13			Suppose a bank has a 12 percent reserve requirement, $10,000 in deposits, and has loaned out all it can given the reserve requirement. Based on this scenario, the money multiplier must be equal to
			A)	8.33
			B)	0.833
			C)	0.12
			D)	83.33