Question 1

When the Federal Reserve System was created in 1913, it was designed to

Accepted Answer

A)  play the role of a passive service agency. 
B)  stabilize the economy through the use of open market operations. 
C)  collect taxes for the federal government. 
D)  mint new gold and silver coins. 
A)  play the role of a passive service agency. 
B)  stabilize the economy through the use of open market operations. 
C)  collect taxes for the federal government. 
D)  mint new gold and silver coins. A

Question 2

In most countries the central bank is

Accepted Answer

A)  totally autonomous from the rest of government. 
B)  semi-independent from the rest of the government. 
C)  a part of the private sector. 
D)  subordinate to the rest of government. 
A)  totally autonomous from the rest of government. 
B)  semi-independent from the rest of the government. 
C)  a part of the private sector. 
D)  subordinate to the rest of government. D

Question 3

Which of the following is a permanent member of the Federal Open Market Committee?

Accepted Answer

A)  President of the New York Federal Reserve Bank 
B)  President of the Washington, D.C. Federal Reserve Bank 
C)  Comptroller of the Currency 
D)  Secretary of the Treasury 
A)  President of the New York Federal Reserve Bank 
B)  President of the Washington, D.C. Federal Reserve Bank 
C)  Comptroller of the Currency 
D)  Secretary of the Treasury A

Question 4

Which of the following is not a permanent member of the FOMC?

Accepted Answer

A)  The president of the New York Fed 
B)  The president of the Philadelphia Fed 
C)  The chairman of the board of governors 
D)  All of the above are permanent members of the FOMC. 
A)  The president of the New York Fed 
B)  The president of the Philadelphia Fed 
C)  The chairman of the board of governors 
D)  All of the above are permanent members of the FOMC.

Question 5

Each regional Federal Reserve Bank is owned by

Accepted Answer

A)  the member banks in its district. 
B)  the Federal Deposit Insurance Corporation. 
C)  those who purchase its stock on the open market. 
D)  the taxpayers in its district. 
A)  the member banks in its district. 
B)  the Federal Deposit Insurance Corporation. 
C)  those who purchase its stock on the open market. 
D)  the taxpayers in its district.

Question 6

Which of the following is considered by experts to have relatively little power within the Federal Reserve?

Accepted Answer

A)  The Board of Governors 
B)  The president of the New York Federal Reserve Bank 
C)  The economic staff of the Board of Governors 
D)  The Federal Advisory Council 
A)  The Board of Governors 
B)  The president of the New York Federal Reserve Bank 
C)  The economic staff of the Board of Governors 
D)  The Federal Advisory Council

Question 7

Members of the Board of Governors serve

Accepted Answer

A)  fourteen year terms. 
B)  four-year terms. 
C)  at the discretion of the Federal Reserve Chairman. 
D)  at the discretion of the President of the United States. 
A)  fourteen year terms. 
B)  four-year terms. 
C)  at the discretion of the Federal Reserve Chairman. 
D)  at the discretion of the President of the United States.

Question 8

The Secretary of the Treasury

Accepted Answer

A)  serves as Chairman of the Board of Governors. 
B)  serves as a member of the Board of Governors. 
C)  serves as a member of the Federal Open Market Committee. 
D)  does not serve on the Board of Governors. 
A)  serves as Chairman of the Board of Governors. 
B)  serves as a member of the Board of Governors. 
C)  serves as a member of the Federal Open Market Committee. 
D)  does not serve on the Board of Governors.

Question 9

The Chairman of the Federal Open Market Committee is also

Accepted Answer

A)  Chairman of the Federal Deposit Insurance Corporation. 
B)  Chairman of the Federal Reserve Board of Governors. 
C)  Comptroller of the Currency. 
D)  President of the New York Federal Reserve Bank. 
A)  Chairman of the Federal Deposit Insurance Corporation. 
B)  Chairman of the Federal Reserve Board of Governors. 
C)  Comptroller of the Currency. 
D)  President of the New York Federal Reserve Bank.

Question 10

Federal Reserve Bank directors

Accepted Answer

A)  have relatively little influence in monetary policy decisions. 
B)  determine bank reserve requirements. 
C)  determine bank capital requirements. 
D)  set the federal funds rate. 
A)  have relatively little influence in monetary policy decisions. 
B)  determine bank reserve requirements. 
C)  determine bank capital requirements. 
D)  set the federal funds rate.

Question 11

The Federal Reserve Bank of New York

Accepted Answer

A)  executes open market operations. 
B)  sets reserve requirements. 
C)  establishes the prime rate. 
D)  establishes the three-month Treasury bill rate. 
A)  executes open market operations. 
B)  sets reserve requirements. 
C)  establishes the prime rate. 
D)  establishes the three-month Treasury bill rate.

Question 12

The President of the United States appoints the

Accepted Answer

A)  directors of the Federal Reserve regional banks. 
B)  presidents of the Federal Reserve regional banks. 
C)  Federal Advisory Council. 
D)  members of the Board of Governors of the Federal Reserve. 
A)  directors of the Federal Reserve regional banks. 
B)  presidents of the Federal Reserve regional banks. 
C)  Federal Advisory Council. 
D)  members of the Board of Governors of the Federal Reserve.

Question 13

The Federal Reserve's primary monetary policy-making body is the

Accepted Answer

A)  Federal Open Market Committee. 
B)  Council of Economic Advisors. 
C)  Federal Advisory Council. 
D)  Federal Deposit Insurance Corporation. 
A)  Federal Open Market Committee. 
B)  Council of Economic Advisors. 
C)  Federal Advisory Council. 
D)  Federal Deposit Insurance Corporation.

Question 14

If Congress passes legislation reducing Federal Reserve independence, financial market participants are likely to assume that

Accepted Answer

A)  the money supply will decline. 
B)  inflation will increase. 
C)  recession will quickly follow. 
D)  the federal deficit will rise. 
A)  the money supply will decline. 
B)  inflation will increase. 
C)  recession will quickly follow. 
D)  the federal deficit will rise.

Question 15

Discount rates are __________ every two weeks by the directors of each regional Federal Reserve Bank but are __________ by the Board of Governors.

Accepted Answer

A)  determined; established 
B)  established; determined 
C)  recommended; established 
D)  determined; recommended 
A)  determined; established 
B)  established; determined 
C)  recommended; established 
D)  determined; recommended

Question 16

In terms of informal power within the Federal Reserve, which of the following groups do experts regard as the most powerful?

Accepted Answer

A)  The Federal Advisory Council 
B)  The economic staff of the U.S. Department of Commerce 
C)  The economic staff of the Board of Governors 
D)  Federal Reserve Bank directors 
A)  The Federal Advisory Council 
B)  The economic staff of the U.S. Department of Commerce 
C)  The economic staff of the Board of Governors 
D)  Federal Reserve Bank directors

Question 17

To make sure that no one group could dominate the direction of monetary policy, the 1913 Federal Reserve Act diffused power in all of the following ways except

Accepted Answer

A)  geographically. 
B)  between the public and private sectors. 
C)  internationally. 
D)  within the government. 
A)  geographically. 
B)  between the public and private sectors. 
C)  internationally. 
D)  within the government.

Question 18

The Federal Reserve is considered by experts to be a government agency that is

Accepted Answer

A)  totally independent from the rest of the federal government. 
B)  semi-independent from the rest of the federal government. 
C)  closely tied to Congress. 
D)  subservient to the interests of large money-center banks. 
A)  totally independent from the rest of the federal government. 
B)  semi-independent from the rest of the federal government. 
C)  closely tied to Congress. 
D)  subservient to the interests of large money-center banks.

Question 19

Unless there are deaths or resignations, a two-term U.S. President can appoint up to

Accepted Answer

A)  twelve members of the Federal Reserve Board of Governors. 
B)  eight members of the Federal Reserve Board of Governors. 
C)  four members of the Federal Reserve Board of Governors. 
D)  two members of the Federal Reserve Board of Governors. 
A)  twelve members of the Federal Reserve Board of Governors. 
B)  eight members of the Federal Reserve Board of Governors. 
C)  four members of the Federal Reserve Board of Governors. 
D)  two members of the Federal Reserve Board of Governors.

Question 20

Which of the following positions is included on the Federal Open Market Committee?

Accepted Answer

A)  Comptroller of the Currency 
B)  Chairman of the Council of Economic Advisors 
C)  Chairman of the Federal Reserve Board of Governors 
D)  Secretary of the Treasury 
A)  Comptroller of the Currency 
B)  Chairman of the Council of Economic Advisors 
C)  Chairman of the Federal Reserve Board of Governors 
D)  Secretary of the Treasury

Exam 17: Who's in Charge Here?

When the Federal Reserve System was created in 1913, it was designed to

In most countries the central bank is

Which of the following is a permanent member of the Federal Open Market Committee?

Which of the following is not a permanent member of the FOMC?

Each regional Federal Reserve Bank is owned by

Which of the following is considered by experts to have relatively little power within the Federal Reserve?

Members of the Board of Governors serve

The Secretary of the Treasury

The Chairman of the Federal Open Market Committee is also

Federal Reserve Bank directors

The Federal Reserve Bank of New York

The President of the United States appoints the

The Federal Reserve's primary monetary policy-making body is the

If Congress passes legislation reducing Federal Reserve independence, financial market participants are likely to assume that

Discount rates are __________ every two weeks by the directors of each regional Federal Reserve Bank but are __________ by the Board of Governors.

In terms of informal power within the Federal Reserve, which of the following groups do experts regard as the most powerful?

To make sure that no one group could dominate the direction of monetary policy, the 1913 Federal Reserve Act diffused power in all of the following ways except

The Federal Reserve is considered by experts to be a government agency that is

Unless there are deaths or resignations, a two-term U.S. President can appoint up to

Which of the following positions is included on the Federal Open Market Committee?

Introducing Money, Banking, and Financial Markets

The Role of Money in the Macroeconomy

Financial Instruments, Markets, and Institutions

Interest Rate Measurement and Behavior

The Term and Risk Structure of Interest Rates

The Structure and Performance of Securities Markets

The Pricing of Risky Financial Assets

Money and Capital Markets

Demystifying Derivatives

Understanding Foreign Exchange

The Nature of Financial Intermediation

Depository Financial Institutions

Nondepository Financial Institutions

Understanding Financial Contracts

The Regulation of Markets and Institutions

Financial System Design

Bank Reserves and the Money Supply

The Instruments of Central Bankin

Understanding Movements in Bank Reserves

Monetary Policy Strategy

The Classical Foundations

The Keynesian Framework

The ISLM World

Money and Economic Stability in the ISLM World

An Aggregate Supply and Demand Perspective on Money and Economic Stability

Rational Expectations: Theory and Policy Implications

Empirical Evidence on the Effectiveness of Monetary Policy

Tying It All Together

Filters

Discount rates are every two weeks by the directors of each regional Federal Reserve Bank but are by the Board of Governors.