358 #
© 2014 Pearson Canada Inc.#
The Business Development Bank of Canada raises money by ____.
A) issuing notes in domestic and foreign financial markets
B) selling shares in domestic capital markets
C) selling shares in foreign capital markets
D) borrowing from the federal government
Answer: D
Diff: 2 Type: MC Page Ref: 288
Skill: Recall
Objective List: 12.8 Understanding government financial intermediation
Fannie Mae and Freddie Mac ____.
A) are U.S. government agencies that provide funds to the mortgage market
B) are the names of U.S. central banks
C) demonstrated great stability during the subprime crisis
D) are pivot points in the business cycle
Answer: A
Diff: 1 Type: MC Page Ref: 308
Skill: Recall
Objective List: 12.8 Understanding government financial intermediation
According to critics, how did the Fed's involvement in organizing the rescue of Long-Term
Capital increase moral hazard?
Answer: Critics have argued that the Fed intervention increased moral hazard by weakening
discipline imposed by the market on fund managers because future Fed interventions of this type
would be expected.
Diff: 3 Type: SA Page Ref: 286
Skill: Recall
Objective List: 12.8 Understanding government financial intermediation