Question 1

The chairman of the Federal Reserve System

Accepted Answer

A)  is appointed by the Secretary of the Treasury. 
B)  serves a life term. 
C)  is the president of the New York Federal Reserve Bank. 
D)  is appointed by the President of the United States. 
A)  is appointed by the Secretary of the Treasury. 
B)  serves a life term. 
C)  is the president of the New York Federal Reserve Bank. 
D)  is appointed by the President of the United States.

Question 2

The Federal Reserve has no power to regulate the overseas activities of member banks and bank holding companies.

Accepted Answer

A) True 
 B)False

Question 3

The National Banking Acts of 1863 and 1864 provided that

Accepted Answer

A)  national banks could issue their own notes only against U.S. government bonds the banks held on deposit with the Treasury. 
B)  national banks could issue their own notes only against cash held in their vaults. 
C)  national banks could issue their own notes only against U.S. government bonds the banks held on deposit with the Federal Reserve Bank. 
D)  none of the above. 
A)  national banks could issue their own notes only against U.S. government bonds the banks held on deposit with the Treasury. 
B)  national banks could issue their own notes only against cash held in their vaults. 
C)  national banks could issue their own notes only against U.S. government bonds the banks held on deposit with the Federal Reserve Bank. 
D)  none of the above.

Question 4

A central bank is a Federal government agency that facilitates operation of the financial system and regulates growth of the money supply.

Accepted Answer

A) True 
 B)False

Question 5

The Board of Governors of the Federal Reserve establishes monetary policy by

Accepted Answer

A)  setting reserve requirements, altering the prime rate, and through federal open market operations. 
B)  setting reserve requirements, altering the discount rate, and through federal open market operations. 
C)  setting reserve requirements, altering the discount rate, and through international currency transactions. 
D)  setting bank profitability ratios, altering the discount rate, and through federal open market operations. 
A)  setting reserve requirements, altering the prime rate, and through federal open market operations. 
B)  setting reserve requirements, altering the discount rate, and through federal open market operations. 
C)  setting reserve requirements, altering the discount rate, and through international currency transactions. 
D)  setting bank profitability ratios, altering the discount rate, and through federal open market operations.

Question 6

When reserves are added to the banking system, depository institutions may expand their lending but are not forced to do so.

Accepted Answer

A) True 
 B)False

Question 7

A central bank serves the nation

Accepted Answer

A)  as a source of consumer credit when otherwise not available. 
B)  by regulating money supply growth. 
C)  as a secondary source of funds for home financing. 
D)  as the strong right arm of the U.S. Treasury. 
A)  as a source of consumer credit when otherwise not available. 
B)  by regulating money supply growth. 
C)  as a secondary source of funds for home financing. 
D)  as the strong right arm of the U.S. Treasury.

Question 8

Open market operations involve the buying and selling of U.S. government securities.

Accepted Answer

A) True 
 B)False

Question 9

The Federal Reserve Advisory Council provides advice and general information to the Secretary of the Treasury.

Accepted Answer

A) True 
 B)False

Question 10

The primary function of the Federal Reserve System is to

Accepted Answer

A)  issue currency to member banks. 
B)  regulate the growth of the money supply. 
C)  serve as a fiscal agent for the U.S. government. 
D)  regulate and conduct bank examinations. 
A)  issue currency to member banks. 
B)  regulate the growth of the money supply. 
C)  serve as a fiscal agent for the U.S. government. 
D)  regulate and conduct bank examinations.

Question 11

The Federal Reserve is empowered to encourage depository institutions to help meet the needs of communities for housing and other purposes

Accepted Answer

A)  through the Community Reinvestment Act. 
B)  through the Truth in Lending Act. 
C)  by a provision of the Fair Housing Act. 
D)  by strictly enforcing usury laws setting maximum interest rates. 
A)  through the Community Reinvestment Act. 
B)  through the Truth in Lending Act. 
C)  by a provision of the Fair Housing Act. 
D)  by strictly enforcing usury laws setting maximum interest rates.

Question 12

A nontraditional monetary policy approach to stimulate economic activity.

Accepted Answer

A)  Excess reserves 
B)  Quantitative reserves 
C)  Fractional easing 
D)  Quantitative easing 
A)  Excess reserves 
B)  Quantitative reserves 
C)  Fractional easing 
D)  Quantitative easing

Question 13

Vault cash and deposits held at Federal Reserve Banks.

Accepted Answer

A)  Excess reserves 
B)  Required reserves ratio 
C)  Fractional reserve system 
D)  Bank reserves 
A)  Excess reserves 
B)  Required reserves ratio 
C)  Fractional reserve system 
D)  Bank reserves

Question 14

Which of the following statements is most correct?

Accepted Answer

A)  Open-market operations do not always lead to an increase in the volume of lending. 
B)  Open-market operations don't always lead to an immediate change in the volume of deposits; this is especially true when bonds are purchased to expand deposit growth. 
C)  Open-market operations always lead to an immediate change in the volume of deposits; this is especially true when bonds are sold to restrict deposit growth. 
D)  Increasing reserve requirements always leads to an immediate increase in the volume of lending; this is especially true when bonds are sold to restrict deposit growth. 
A)  Open-market operations do not always lead to an increase in the volume of lending. 
B)  Open-market operations don't always lead to an immediate change in the volume of deposits; this is especially true when bonds are purchased to expand deposit growth. 
C)  Open-market operations always lead to an immediate change in the volume of deposits; this is especially true when bonds are sold to restrict deposit growth. 
D)  Increasing reserve requirements always leads to an immediate increase in the volume of lending; this is especially true when bonds are sold to restrict deposit growth.

Question 15

The basic policy instruments that the Fed uses to execute monetary policy include all of the following except

Accepted Answer

A)  changing reserve requirements. 
B)  changing the lending/discount rate. 
C)  conducting closed market operations. 
D)  conducting open market operations. 
A)  changing reserve requirements. 
B)  changing the lending/discount rate. 
C)  conducting closed market operations. 
D)  conducting open market operations.

Question 16

Empirical evidence shows that in countries where central banks are relatively independent from their governments, there has been higher inflation and lower economic growth rates than in countries where central banks are closely tied to their governments.

Accepted Answer

A) True 
 B)False

Question 17

The percentage of deposits that must be held as reserves is called

Accepted Answer

A)  the bank reserve percentage 
B)  the required reserve ratio 
C)  the excess reserve ratio 
D)  the fractional reserve percentage 
A)  the bank reserve percentage 
B)  the required reserve ratio 
C)  the excess reserve ratio 
D)  the fractional reserve percentage

Question 18

The Federal Reserve System consists of all of the following components except

Accepted Answer

A)  Monetary Policy Committee. 
B)  Board of Governors. 
C)  Federal Open Market Committee. 
D)  Federal Reserve District Banks. 
A)  Monetary Policy Committee. 
B)  Board of Governors. 
C)  Federal Open Market Committee. 
D)  Federal Reserve District Banks.

Question 19

The federal funds rate is the interest rate on overnight loans from banks with excess reserves to the Fed.

Accepted Answer

A) True 
 B)False

Question 20

The __________________, passed in 1968, requires the clear explanation of consumer credit costs and garnishment procedures (taking wages or property by legal means) and prohibits overly high-priced credit transactions.

Accepted Answer

A)  Consumer Credit Expansion Act 
B)  Credit Growth Act 
C)  Consumer Credit Protection Act 
D)  Consumer Safety Act 
A)  Consumer Credit Expansion Act 
B)  Credit Growth Act 
C)  Consumer Credit Protection Act 
D)  Consumer Safety Act

The chairman of the Federal Reserve System

The Federal Reserve has no power to regulate the overseas activities of member banks and bank holding companies.

The National Banking Acts of 1863 and 1864 provided that

A central bank is a Federal government agency that facilitates operation of the financial system and regulates growth of the money supply.

The Board of Governors of the Federal Reserve establishes monetary policy by

When reserves are added to the banking system, depository institutions may expand their lending but are not forced to do so.

A central bank serves the nation

Open market operations involve the buying and selling of U.S. government securities.

The Federal Reserve Advisory Council provides advice and general information to the Secretary of the Treasury.

The primary function of the Federal Reserve System is to

The Federal Reserve is empowered to encourage depository institutions to help meet the needs of communities for housing and other purposes

A nontraditional monetary policy approach to stimulate economic activity.

Vault cash and deposits held at Federal Reserve Banks.

Which of the following statements is most correct?

The basic policy instruments that the Fed uses to execute monetary policy include all of the following except

Empirical evidence shows that in countries where central banks are relatively independent from their governments, there has been higher inflation and lower economic growth rates than in countries where central banks are closely tied to their governments.

The percentage of deposits that must be held as reserves is called

The Federal Reserve System consists of all of the following components except

The federal funds rate is the interest rate on overnight loans from banks with excess reserves to the Fed.

The __________________, passed in 1968, requires the clear explanation of consumer credit costs and garnishment procedures (taking wages or property by legal means) and prohibits overly high-priced credit transactions.

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 4: Federal Reserve System

The chairman of the Federal Reserve System

The Federal Reserve has no power to regulate the overseas activities of member banks and bank holding companies.

The National Banking Acts of 1863 and 1864 provided that

A central bank is a Federal government agency that facilitates operation of the financial system and regulates growth of the money supply.

The Board of Governors of the Federal Reserve establishes monetary policy by

When reserves are added to the banking system, depository institutions may expand their lending but are not forced to do so.

A central bank serves the nation

Open market operations involve the buying and selling of U.S. government securities.

The Federal Reserve Advisory Council provides advice and general information to the Secretary of the Treasury.

The primary function of the Federal Reserve System is to

The Federal Reserve is empowered to encourage depository institutions to help meet the needs of communities for housing and other purposes

A nontraditional monetary policy approach to stimulate economic activity.

Vault cash and deposits held at Federal Reserve Banks.

Which of the following statements is most correct?

The basic policy instruments that the Fed uses to execute monetary policy include all of the following except

Empirical evidence shows that in countries where central banks are relatively independent from their governments, there has been higher inflation and lower economic growth rates than in countries where central banks are closely tied to their governments.

The percentage of deposits that must be held as reserves is called

The Federal Reserve System consists of all of the following components except

The federal funds rate is the interest rate on overnight loans from banks with excess reserves to the Fed.

The __________________, passed in 1968, requires the clear explanation of consumer credit costs and garnishment procedures (taking wages or property by legal means) and prohibits overly high-priced credit transactions.

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuations

Securities and Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters