Question 1

Which of the following is true about the Monetary Control Act of 1980?

Accepted Answer

A) It reduced the distinction between different types of depository institutions. 
B) It further restricted the Federal Reserve's control of the banking system. 
C) It placed credit unions,mutual savings banks,and nonmember banks under regulatory institutions other than the Fed. 
D) It deregulated the banking industry. 
A) It reduced the distinction between different types of depository institutions. 
B) It further restricted the Federal Reserve's control of the banking system. 
C) It placed credit unions,mutual savings banks,and nonmember banks under regulatory institutions other than the Fed. 
D) It deregulated the banking industry.

Question 2

If the annual interest rate printed on the face of a bond is 7 percent,the face value of the bond is $1,000,and the current market price of the bond is $250,what is the current yield on the bond?

Accepted Answer

A) 25 percent. 
B) 14 percent. 
C) 28 percent. 
D) 18 percent. 
A) 25 percent. 
B) 14 percent. 
C) 28 percent. 
D) 18 percent.

Question 3

Which of the following services is performed by the regional Federal Reserve banks?

Accepted Answer

A) Holding bank reserves. 
B) Bailing out or liquidating failed banks. 
C) Determining open market operations. 
D) Issuing government bonds. 
A) Holding bank reserves. 
B) Bailing out or liquidating failed banks. 
C) Determining open market operations. 
D) Issuing government bonds.

Question 4

Which of the following equals the current yield on a bond?

Accepted Answer

A) Required reserve ratio ×total deposits. 
B) Total reserves - required reserves. 
C) (Total reserves - required reserves)× the money multiplier. 
D) Annual interest payment ÷ current market price of the bond. 
A) Required reserve ratio ×total deposits. 
B) Total reserves - required reserves. 
C) (Total reserves - required reserves)× the money multiplier. 
D) Annual interest payment ÷ current market price of the bond.

Question 5

The purchase and sale of government bonds by the Fed for the purpose of altering bank reserves is known as

Accepted Answer

A) Fiscal policy. 
B) Federal funds operations. 
C) Open market operations. 
D) Zero coupon bonding. 
A) Fiscal policy. 
B) Federal funds operations. 
C) Open market operations. 
D) Zero coupon bonding.

Question 6

If the required reserve ratio is 5 percent and the Federal Reserve sells $10,000 worth of bonds,the money supply can potentially

Accepted Answer

A) Decrease by $200,000. 
B) Decrease by $50,000. 
C) Decrease by $500. 
D) Increase by $50,000. 
A) Decrease by $200,000. 
B) Decrease by $50,000. 
C) Decrease by $500. 
D) Increase by $50,000.

Exam 14: The Federal Reserve System

Which of the following is true about the Monetary Control Act of 1980?

If the annual interest rate printed on the face of a bond is 7 percent,the face value of the bond is $1,000,and the current market price of the bond is $250,what is the current yield on the bond?

Which of the following services is performed by the regional Federal Reserve banks?

Which of the following equals the current yield on a bond?

The purchase and sale of government bonds by the Fed for the purpose of altering bank reserves is known as

If the required reserve ratio is 5 percent and the Federal Reserve sells $10,000 worth of bonds,the money supply can potentially

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