Question 1

Foreign exchange reserves are held by ________.

Accepted Answer

A)  the federal government 
B)  the department of finance 
C)  the Ministry of Central Banking 
D)  individual provinces and territories 
A)  the federal government 
B)  the department of finance 
C)  the Ministry of Central Banking 
D)  individual provinces and territories

Question 2

The Bank of Japan was founded in ________.

Accepted Answer

A)  1882 
B)  1922 
C)  1932 
D)  1952 
A)  1882 
B)  1922 
C)  1932 
D)  1952

Question 3

The Bank of Canada enjoys ________.

Accepted Answer

A)  instrument independence 
B)  political independence 
C)  goal independence 
D)  A and B only. 
A)  instrument independence 
B)  political independence 
C)  goal independence 
D)  A and B only.

Question 4

Which of the following are entities of the Federal Reserve System?

Accepted Answer

A)  Federal Reserve Banks 
B)  The FDIC 
C)  The Board of Advisors 
D)  A and B only 
A)  Federal Reserve Banks 
B)  The FDIC 
C)  The Board of Advisors 
D)  A and B only

Question 5

Which of the following functions does the Bank of Canada perform?

Accepted Answer

A)  Bank note issue 
B)  Municipal government fiscal policy management 
C)  Provincial government fiscal policy management 
D)  Advise the Federal Reserve 
A)  Bank note issue 
B)  Municipal government fiscal policy management 
C)  Provincial government fiscal policy management 
D)  Advise the Federal Reserve

Question 6

Which of the following statements about central bank structure and independence are NOT true?

Accepted Answer

A)  In recent years, with the exception of the Bank of England and the Bank of Japan, most countries have reduced the independence of their central banks, subjecting them to greater democratic control. 
B)  Before the Bank of England was granted greater independence, the Federal Reserve was the most independent of the world's central banks. 
C)  Both theory and experience suggest that more independent central banks produce better monetary policy. 
D)  A and B only 
A)  In recent years, with the exception of the Bank of England and the Bank of Japan, most countries have reduced the independence of their central banks, subjecting them to greater democratic control. 
B)  Before the Bank of England was granted greater independence, the Federal Reserve was the most independent of the world's central banks. 
C)  Both theory and experience suggest that more independent central banks produce better monetary policy. 
D)  A and B only

Question 7

Which of the following statements about central bank structure and independence are true?

Accepted Answer

A)  In recent years there has been a remarkable trend toward increasing independence. 
B)  In recent years, greater independence has been granted to many central banks, with the exception of the Bank of England and the Bank of Japan, which are still subject to strict governmental control. 
C)  In theory, central banks subject to government control produce better monetary policy, but experience suggests that more independent central banks have produced superior monetary policy results. 
D)  A and B only 
A)  In recent years there has been a remarkable trend toward increasing independence. 
B)  In recent years, greater independence has been granted to many central banks, with the exception of the Bank of England and the Bank of Japan, which are still subject to strict governmental control. 
C)  In theory, central banks subject to government control produce better monetary policy, but experience suggests that more independent central banks have produced superior monetary policy results. 
D)  A and B only

Question 8

Putting the Bank of Canada under control of the government ________.

Accepted Answer

A)  may place too much pressure on the Bank of Canada to finance federal budget deficits 
B)  impart an inflationary bias to monetary policy 
C)  generate a political business cycle, in which just before an election contractionary policies are pursued to raise unemployment and interest rates 
D)  may cause A and B only 
A)  may place too much pressure on the Bank of Canada to finance federal budget deficits 
B)  impart an inflationary bias to monetary policy 
C)  generate a political business cycle, in which just before an election contractionary policies are pursued to raise unemployment and interest rates 
D)  may cause A and B only

Question 9

Base money is also know as ________.

Accepted Answer

A)  monetary base 
B)  power money 
C)  monetary liability 
D)  fund accounts 
A)  monetary base 
B)  power money 
C)  monetary liability 
D)  fund accounts

Question 10

Which of the following statements about central bank structure and independence are true?

Accepted Answer

A)  In recent years, with the exception of the Bank of England and the Bank of Japan, most countries have reduced the independence of their central banks, subjecting them to greater democratic control. 
B)  Before the Bank of England was granted greater independence, the Federal Reserve was the most independent of the world's central banks. 
C)  Both theory and experience suggest that more independent central banks produce better monetary policy. 
D)  While the European Central Bank is independent, it is not as independent as the Federal Reserve. 
A)  In recent years, with the exception of the Bank of England and the Bank of Japan, most countries have reduced the independence of their central banks, subjecting them to greater democratic control. 
B)  Before the Bank of England was granted greater independence, the Federal Reserve was the most independent of the world's central banks. 
C)  Both theory and experience suggest that more independent central banks produce better monetary policy. 
D)  While the European Central Bank is independent, it is not as independent as the Federal Reserve.

Question 11

Recent research has found that countries with the most independent central banks have experienced ________.

Accepted Answer

A)  the lowest average rates of inflation 
B)  rates of inflation no different from countries with less independent central banks 
C)  the highest average rates of inflation 
D)  high inflation from financing deficits 
A)  the lowest average rates of inflation 
B)  rates of inflation no different from countries with less independent central banks 
C)  the highest average rates of inflation 
D)  high inflation from financing deficits

Question 12

The ability of a central bank to set monetary policy instruments 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

Question 13

Economist Stanley Fisher defined two types of independence of central banks: ________ and ________ independence.

Accepted Answer

A)  instrument; goal 
B)  policy; goal 
C)  instrument; political 
D)  parliamentary; decision 
A)  instrument; goal 
B)  policy; goal 
C)  instrument; political 
D)  parliamentary; decision

Question 14

The main motivation for the formation of the Bank of Canada in 1934 was ________.

Accepted Answer

A)  financial 
B)  the need for Canada to reflect its growing political independence from Britain 
C)  the need for Canada to coordinate its international trade policy 
D)  government debt 
A)  financial 
B)  the need for Canada to reflect its growing political independence from Britain 
C)  the need for Canada to coordinate its international trade policy 
D)  government debt

Question 15

The benefit of the Ban k of Canada's role as the lender-of-last-resort include ________.

Accepted Answer

A)  easing liquidity problems of any financial institution 
B)  deterring bank runs and panics 
C)  reducing the monetary base to increase liquidity 
D)  A and B only 
A)  easing liquidity problems of any financial institution 
B)  deterring bank runs and panics 
C)  reducing the monetary base to increase liquidity 
D)  A and B only

Question 16

The board of governors members of the federal reserve system in the U.S. are appointed by the ________ and confirmed by the ________.

Accepted Answer

A)  president; senate 
B)  president; house of representatives 
C)  senate; president 
D)  house of representatives; president 
A)  president; senate 
B)  president; house of representatives 
C)  senate; president 
D)  house of representatives; president

Question 17

The Executive Board of the European Central Bank ________.

Accepted Answer

A)  consists of the European Central Bank's president, vice president, and four other members 
B)  is responsible for the business of the European Central Bank 
C)  is responsible for the implementation of monetary policy in accordance with the guidelines set by the Governing Council 
D)  All of the above. 
A)  consists of the European Central Bank's president, vice president, and four other members 
B)  is responsible for the business of the European Central Bank 
C)  is responsible for the implementation of monetary policy in accordance with the guidelines set by the Governing Council 
D)  All of the above.

Question 18

Changes in the ________ lead to ________ changes in the money supply.

Accepted Answer

A)  monetary base; multiple 
B)  monetary base; equal 
C)  inflation rate; multiple 
D)  inflation rate; equal 
A)  monetary base; multiple 
B)  monetary base; equal 
C)  inflation rate; multiple 
D)  inflation rate; equal

Question 19

The oldest central bank, having been founded in 1694, is the ________.

Accepted Answer

A)  Bank of England 
B)  Deutsche Bundesbank 
C)  Bank of Japan 
D)  Federal Reserve System 
A)  Bank of England 
B)  Deutsche Bundesbank 
C)  Bank of Japan 
D)  Federal Reserve System

Question 20

Regarding central bank independence, ________.

Accepted Answer

A)  the Fed is more independent than the European Central Bank 
B)  the European Central Bank is more independent than the Fed 
C)  the trend in industrialized nations has been to reduce central bank independence 
D)  the Bank of England has the longest tradition of independence of any central bank in the world 
A)  the Fed is more independent than the European Central Bank 
B)  the European Central Bank is more independent than the Fed 
C)  the trend in industrialized nations has been to reduce central bank independence 
D)  the Bank of England has the longest tradition of independence of any central bank in the world

Exam 14: Central Banks and the Bank of Canada

Foreign exchange reserves are held by ________.

The Bank of Japan was founded in ________.

The Bank of Canada enjoys ________.

Which of the following are entities of the Federal Reserve System?

Which of the following functions does the Bank of Canada perform?

Which of the following statements about central bank structure and independence are NOT true?

Which of the following statements about central bank structure and independence are true?

Putting the Bank of Canada under control of the government ________.

Base money is also know as ________.

Which of the following statements about central bank structure and independence are true?

Recent research has found that countries with the most independent central banks have experienced ________.

The ability of a central bank to set monetary policy instruments is ________.

Economist Stanley Fisher defined two types of independence of central banks: ________ and ________ independence.

The main motivation for the formation of the Bank of Canada in 1934 was ________.

The benefit of the Ban k of Canada's role as the lender-of-last-resort include ________.

The board of governors members of the federal reserve system in the U.S. are appointed by the ________ and confirmed by the ________.

The Executive Board of the European Central Bank ________.

Changes in the ________ lead to ________ changes in the money supply.

The oldest central bank, having been founded in 1694, is the ________.

Regarding central bank independence, ________.

Why Study Money, Banking, and Financial Markets

An Overview of the Financial System

What Is Money

The Meaning of Interest Rates

The Behaviour 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

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Financial Crises

Banking and the Management of Financial Institutions

Risk Management With Financial Derivatives

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

Filters

Economist Stanley Fisher defined two types of independence of central banks: and independence.

The board of governors members of the federal reserve system in the U.S. are appointed by the and confirmed by the .

Changes in the lead to changes in the money supply.