Question 1

Which of the followings is a duty of the Board of Governors of the Federal Reserve System?

Accepted Answer

A) Setting margin requirements,the fraction of the purchase price of the securities that has to be paid for with cash. 
B) Setting the maximum interest rates payable on certain types of time deposits under Regulation Q. 
C) Regulating credit with the approval of the president under the Credit Control Act of 1969. 
D) All governors advise the president of the United States on economic policy. 
A) Setting margin requirements,the fraction of the purchase price of the securities that has to be paid for with cash. 
B) Setting the maximum interest rates payable on certain types of time deposits under Regulation Q. 
C) Regulating credit with the approval of the president under the Credit Control Act of 1969. 
D) All governors advise the president of the United States on economic policy. A

Question 2

The ability of a central bank to set monetary policy goals is

Accepted Answer

A) political independence. 
B) goal independence. 
C) policy independence. 
D) instrument independence. 
A) political independence. 
B) goal independence. 
C) policy independence. 
D) instrument independence. B

Question 3

Which of the following statements comparing the European System of Central Banks and the Federal Reserve System is TRUE?

Accepted Answer

A) The budgets of the Federal Reserve Banks are controlled by the Board of Governors,while the National Central Banks control their own budgets and the budget of the European Central Bank. 
B) The European Central Bank has similar power over the National Central Banks when compared to the level of power the Board of Governors has over the Federal Reserve Banks. 
C) Just like the Federal Reserve System,monetary operations are centralized in the European System of Central Banks with the European Central Bank. 
D) The European Central Bank's involvement in supervision and regulation of financial institutions is comparable to the Board of Governors' involvement. 
A) The budgets of the Federal Reserve Banks are controlled by the Board of Governors,while the National Central Banks control their own budgets and the budget of the European Central Bank. 
B) The European Central Bank has similar power over the National Central Banks when compared to the level of power the Board of Governors has over the Federal Reserve Banks. 
C) Just like the Federal Reserve System,monetary operations are centralized in the European System of Central Banks with the European Central Bank. 
D) The European Central Bank's involvement in supervision and regulation of financial institutions is comparable to the Board of Governors' involvement. A

Question 4

The Fed's support of the Depository Institutions Deregulation and Monetary Control Act of 1980 stemmed in part from its

Accepted Answer

A) concern over declining Fed membership. 
B) belief that all banking regulations should be eliminated. 
C) belief that interest rate ceilings were too high. 
D) belief that depositors had to become more knowledgeable of banking operations. 
A) concern over declining Fed membership. 
B) belief that all banking regulations should be eliminated. 
C) belief that interest rate ceilings were too high. 
D) belief that depositors had to become more knowledgeable of banking operations.

Question 5

While the discount rate is "established" by the regional Federal Reserve Banks,in truth,the rate is determined by

Accepted Answer

A) Congress. 
B) the president of the United States. 
C) the Senate. 
D) the Board of Governors. 
A) Congress. 
B) the president of the United States. 
C) the Senate. 
D) the Board of Governors.

Question 6

Each Fed bank president attends FOMC meetings; although only ________ Fed bank presidents vote on policy,all ________ provide input.

Accepted Answer

A) three; ten 
B) five; ten 
C) three; twelve 
D) five; twelve 
A) three; ten 
B) five; ten 
C) three; twelve 
D) five; twelve

Question 7

The Federal Open Market Committee usually meets ________ times a year.

Accepted Answer

A) four 
B) six 
C) eight 
D) twelve 
A) four 
B) six 
C) eight 
D) twelve

Question 8

The Second Bank of the United States

Accepted Answer

A) was disbanded in 1811 when its charter was not renewed. 
B) had its charter renewal vetoed in 1832. 
C) is considered to be the primary cause of the bank panic of 1907. 
D) None of the above. 
A) was disbanded in 1811 when its charter was not renewed. 
B) had its charter renewal vetoed in 1832. 
C) is considered to be the primary cause of the bank panic of 1907. 
D) None of the above.

Question 9

Prior to 1980,member banks left the Federal Reserve System due to

Accepted Answer

A) the high cost of discount loans. 
B) the high cost of required reserves. 
C) a desire to avoid interest rate regulations. 
D) a desire to avoid credit controls. 
A) the high cost of discount loans. 
B) the high cost of required reserves. 
C) a desire to avoid interest rate regulations. 
D) a desire to avoid credit controls.

Question 10

Recent research indicates that inflation performance (low inflation)has been found to be best in countries with

Accepted Answer

A) the most independent central banks. 
B) political control of monetary policy. 
C) money financing of budget deficits. 
D) a policy of always keeping interest rates low. 
A) the most independent central banks. 
B) political control of monetary policy. 
C) money financing of budget deficits. 
D) a policy of always keeping interest rates low.

Question 11

Of all commercial banks,about ________ percent belong to the Federal Reserve System.

Accepted Answer

A) 17 
B) 22 
C) 38 
D) 52 
A) 17 
B) 22 
C) 38 
D) 52

Question 12

What is the theory of bureaucratic behavior and how can it be used to explain the behavior of the Federal Reserve?

Accepted Answer

The theory of bureaucratic behavior conc

Question 13

The Federal Reserve entity that makes decisions regarding the conduct of open market operations is the

Accepted Answer

A) Board of Governors. 
B) chairman of the Board of Governors. 
C) Federal Open Market Committee. 
D) Open Market Advisory Council 
A) Board of Governors. 
B) chairman of the Board of Governors. 
C) Federal Open Market Committee. 
D) Open Market Advisory Council

Question 14

The three largest Federal Reserve banks (New York,Chicago,and San Francisco)combined hold more than ________ percent of the assets of the Federal Reserve System.

Accepted Answer

A) 25 
B) 33 
C) 50 
D) 67 
A) 25 
B) 33 
C) 50 
D) 67

Question 15

Explain two concepts of central bank independence.Is the Fed politically independent? Why do economists think central bank independence is important?

Accepted Answer

Instrument independence is the ability o

Question 16

The theory of bureaucratic behavior suggests that the objective of a bureaucracy is to maximize

Accepted Answer

A) the public's welfare. 
B) profits. 
C) its own welfare. 
D) conflict with the executive and legislative branches of government. 
A) the public's welfare. 
B) profits. 
C) its own welfare. 
D) conflict with the executive and legislative branches of government.

Question 17

The Federal Open Market Committee consists of the

Accepted Answer

A) five senior members of the seven-member Board of Governors. 
B) seven members of the Board of Governors and seven presidents of the regional Fed banks. 
C) seven members of the Board of Governors and five presidents of the regional Fed banks. 
D) twelve regional Fed bank presidents and the chairman of the Board of Governors. 
A) five senior members of the seven-member Board of Governors. 
B) seven members of the Board of Governors and seven presidents of the regional Fed banks. 
C) seven members of the Board of Governors and five presidents of the regional Fed banks. 
D) twelve regional Fed bank presidents and the chairman of the Board of Governors.

Question 18

The teal book is the Fed research document containing

Accepted Answer

A) the forecast of national economic variables for the next three years. 
B) forecasts of the money aggregates conditional on different monetary policy stances. 
C) information on the state of the economy in each Federal Reserve district. 
D) both A and B. 
E) A,B and C. 
A) the forecast of national economic variables for the next three years. 
B) forecasts of the money aggregates conditional on different monetary policy stances. 
C) information on the state of the economy in each Federal Reserve district. 
D) both A and B. 
E) A,B and C.

Question 19

Critics of the current system of Fed independence contend that

Accepted Answer

A) the current system is undemocratic. 
B) voters have too much say about monetary policy. 
C) the president has too much control over monetary policy on a day-to-day basis. 
D) the Board of Governors is held responsible for policy missteps. 
A) the current system is undemocratic. 
B) voters have too much say about monetary policy. 
C) the president has too much control over monetary policy on a day-to-day basis. 
D) the Board of Governors is held responsible for policy missteps.

Question 20

The trend in recent years is that more and more governments

Accepted Answer

A) have been granting greater independence to their central banks. 
B) have been reducing the independence of their central banks to make them more accountable for poor economic performance. 
C) have mandated that their central banks focus on controlling inflation. 
D) have required their central banks to cooperate more with their Ministers of Finance. 
A) have been granting greater independence to their central banks. 
B) have been reducing the independence of their central banks to make them more accountable for poor economic performance. 
C) have mandated that their central banks focus on controlling inflation. 
D) have required their central banks to cooperate more with their Ministers of Finance.

Exam 13: Central Banks and the Federal Reserve System

Which of the followings is a duty of the Board of Governors of the Federal Reserve System?

The ability of a central bank to set monetary policy goals is

Which of the following statements comparing the European System of Central Banks and the Federal Reserve System is TRUE?

The Fed's support of the Depository Institutions Deregulation and Monetary Control Act of 1980 stemmed in part from its

While the discount rate is "established" by the regional Federal Reserve Banks,in truth,the rate is determined by

Each Fed bank president attends FOMC meetings; although only ________ Fed bank presidents vote on policy,all ________ provide input.

The Federal Open Market Committee usually meets ________ times a year.

The Second Bank of the United States

Prior to 1980,member banks left the Federal Reserve System due to

Recent research indicates that inflation performance (low inflation)has been found to be best in countries with

Of all commercial banks,about ________ percent belong to the Federal Reserve System.

What is the theory of bureaucratic behavior and how can it be used to explain the behavior of the Federal Reserve?

The Federal Reserve entity that makes decisions regarding the conduct of open market operations is the

The three largest Federal Reserve banks (New York,Chicago,and San Francisco)combined hold more than ________ percent of the assets of the Federal Reserve System.

Explain two concepts of central bank independence.Is the Fed politically independent? Why do economists think central bank independence is important?

The theory of bureaucratic behavior suggests that the objective of a bureaucracy is to maximize

The Federal Open Market Committee consists of the

The teal book is the Fed research document containing

Critics of the current system of Fed independence contend that

The trend in recent years is that more and more governments

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

Understanding Interest Rates

The Behavior of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Financial Crises

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory,inflation and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

The Role of Expectations in Monetary Policy

Transmission Mechanisms of Monetary Policy

The ISLM Model

Filters

Each Fed bank president attends FOMC meetings; although only Fed bank presidents vote on policy,all provide input.