Question 1

Dynamic actions are Fed activities that off set unexpected monetary developments and contribute to the smooth, everyday functioning of the economy.

Accepted Answer

A) True 
 B)False

Question 2

Open market operations

Accepted Answer

A)  are used infrequently 
B)  are a prime source of income for the U.S. economy 
C)  are used by the Fed to alter bank reserves 
D)  are used by the Fed to issue securities 
A)  are used infrequently 
B)  are a prime source of income for the U.S. economy 
C)  are used by the Fed to alter bank reserves 
D)  are used by the Fed to issue securities

Question 3

The purpose of Regulation Z is to

Accepted Answer

A)  make consumers aware of the costs of alternative forms of credit. 
B)  prohibit garnishment. 
C)  encourage depository institutions to help meet the credit needs of their communities for housing and other purposes. 
D)  regulate the overseas activities of member banks of the Federal Reserve System. 
A)  make consumers aware of the costs of alternative forms of credit. 
B)  prohibit garnishment. 
C)  encourage depository institutions to help meet the credit needs of their communities for housing and other purposes. 
D)  regulate the overseas activities of member banks of the Federal Reserve System.

Question 4

The minimum amount of total reserves that a depository institution must hold.

Accepted Answer

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

Question 5

Which of the following statements would be false? The discount rate is

Accepted Answer

A)  an instrument of monetary policy. 
B)  frequently used as a tool of fiscal policy. 
C)  regarded as a fine-tuning mechanism. 
D)  is set by the Fed. 
A)  an instrument of monetary policy. 
B)  frequently used as a tool of fiscal policy. 
C)  regarded as a fine-tuning mechanism. 
D)  is set by the Fed.

Question 6

U.S. central bank that sets monetary policy and regulates banking system.

Accepted Answer

A)  Government National Mortgage Association 
B)  Federal National Mortgage Association 
C)  Federal Home Loan Mortgage Corporation 
D)  Federal Reserve System 
A)  Government National Mortgage Association 
B)  Federal National Mortgage Association 
C)  Federal Home Loan Mortgage Corporation 
D)  Federal Reserve System

Question 7

The Fed shares its depository examining functions with

Accepted Answer

A)  the Federal Savings and Loan Insurance Corporation. 
B)  the FDIC, Comptroller of the Currency, and state agencies. 
C)  only the Comptroller of the Currency. 
D)  National Credit Union administration and the FDIC. 
A)  the Federal Savings and Loan Insurance Corporation. 
B)  the FDIC, Comptroller of the Currency, and state agencies. 
C)  only the Comptroller of the Currency. 
D)  National Credit Union administration and the FDIC.

Question 8

The Fed discount rate is

Accepted Answer

A)  the rate charged a bank's best customers. 
B)  the rate paid by large business with good credit. 
C)  the rate a bank must pay to borrow from the Fed. 
D)  the rate one bank loans to another bank. 
A)  the rate charged a bank's best customers. 
B)  the rate paid by large business with good credit. 
C)  the rate a bank must pay to borrow from the Fed. 
D)  the rate one bank loans to another bank.

Question 9

Which of the following is not a method by which the Federal Reserve establishes monetary policy?

Accepted Answer

A)  setting reserve requirements 
B)  altering the discount rate 
C)  through federal open market operations 
D)  setting bank profitability ratios 
A)  setting reserve requirements 
B)  altering the discount rate 
C)  through federal open market operations 
D)  setting bank profitability ratios

Question 10

Under the Federal Reserve Act of 1913, the number of Federal Reserve districts established is

Accepted Answer

A)  8 
B)  10 
C)  12 
D)  25 
A)  8 
B)  10 
C)  12 
D)  25

Question 11

The United States was one of the last major industrial nations to adopt a permanent system of central banking.

Accepted Answer

A) True 
 B)False

Question 12

Because depository institutions earn no interest on reserves

Accepted Answer

A)  profit maximizing behavior motivates them to lend out excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are high, this motivation is especially strong. 
B)  profit maximizing behavior motivates them to lend out excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are low, this motivation is especially strong. 
C)  profit maximizing behavior motivates them to retain excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are low, this motivation is especially strong. 
D)  profit maximizing behavior motivates them to retain excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are high, this motivation is especially strong. 
A)  profit maximizing behavior motivates them to lend out excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are high, this motivation is especially strong. 
B)  profit maximizing behavior motivates them to lend out excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are low, this motivation is especially strong. 
C)  profit maximizing behavior motivates them to retain excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are low, this motivation is especially strong. 
D)  profit maximizing behavior motivates them to retain excess reserves to the fullest extent consistent with their liquidity requirements; and when interest rates are high, this motivation is especially strong.

Question 13

__________________ become the most important and effective means of monetary and credit control.

Accepted Answer

A)  Changing reserve requirements has 
B)  Changing the discount rate has 
C)  Open market operations has 
D)  Changing the Treasury bill rate has 
A)  Changing reserve requirements has 
B)  Changing the discount rate has 
C)  Open market operations has 
D)  Changing the Treasury bill rate has

Question 14

Discount policy is still a major instrument of monetary policy.

Accepted Answer

A) True 
 B)False

Question 15

Although a central bank does not necessarily operate for profit, it generally deals directly with the public.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is a method by which the Federal Reserve establishes monetary policy?

Accepted Answer

A)  setting reserve requirements, 
B)  altering the discount rate, 
C)  through federal open market operations, 
D)  all of the above methods are used. 
A)  setting reserve requirements, 
B)  altering the discount rate, 
C)  through federal open market operations, 
D)  all of the above methods are used.

Question 17

Reserves must be held equal to a certain percentage of bank deposits.

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 18

The Reserve Banks provide a wide range of important services to depository institutions and to the U.S. government.

Accepted Answer

A) True 
 B)False

Question 19

The interest rate that a bank must pay to borrow from its regional federal reserve bank is called

Accepted Answer

A)  the National Discount Rate. 
B)  the Prime Rate. 
C)  the Federal Discount Rate. 
D)  Fed Funds rate. 
A)  the National Discount Rate. 
B)  the Prime Rate. 
C)  the Federal Discount Rate. 
D)  Fed Funds rate.

Question 20

A (n) ____________________ is necessary for the monetary system to carry out the financial function of transferring money, which in turn is a requirement for an effective financial system.

Accepted Answer

A)  internet banking system 
B)  electronic data transfer system 
C)  wire transfer system 
D)  efficient payments mechanism 
A)  internet banking system 
B)  electronic data transfer system 
C)  wire transfer system 
D)  efficient payments mechanism

Dynamic actions are Fed activities that off set unexpected monetary developments and contribute to the smooth, everyday functioning of the economy.

Open market operations

The purpose of Regulation Z is to

The minimum amount of total reserves that a depository institution must hold.

Which of the following statements would be false? The discount rate is

U.S. central bank that sets monetary policy and regulates banking system.

The Fed shares its depository examining functions with

The Fed discount rate is

Which of the following is not a method by which the Federal Reserve establishes monetary policy?

Under the Federal Reserve Act of 1913, the number of Federal Reserve districts established is

The United States was one of the last major industrial nations to adopt a permanent system of central banking.

Because depository institutions earn no interest on reserves

__________________ become the most important and effective means of monetary and credit control.

Discount policy is still a major instrument of monetary policy.

Although a central bank does not necessarily operate for profit, it generally deals directly with the public.

Which of the following is a method by which the Federal Reserve establishes monetary policy?

Reserves must be held equal to a certain percentage of bank deposits.

The Reserve Banks provide a wide range of important services to depository institutions and to the U.S. government.

The interest rate that a bank must pay to borrow from its regional federal reserve bank is called

A (n) ____________________ is necessary for the monetary system to carry out the financial function of transferring money, which in turn is a requirement for an effective financial system.

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

Dynamic actions are Fed activities that off set unexpected monetary developments and contribute to the smooth, everyday functioning of the economy.

Open market operations

The purpose of Regulation Z is to

The minimum amount of total reserves that a depository institution must hold.

Which of the following statements would be false? The discount rate is

U.S. central bank that sets monetary policy and regulates banking system.

The Fed shares its depository examining functions with

The Fed discount rate is

Which of the following is not a method by which the Federal Reserve establishes monetary policy?

Under the Federal Reserve Act of 1913, the number of Federal Reserve districts established is

The United States was one of the last major industrial nations to adopt a permanent system of central banking.

Because depository institutions earn no interest on reserves

__________________ become the most important and effective means of monetary and credit control.

Discount policy is still a major instrument of monetary policy.

Although a central bank does not necessarily operate for profit, it generally deals directly with the public.

Which of the following is a method by which the Federal Reserve establishes monetary policy?

Reserves must be held equal to a certain percentage of bank deposits.

The Reserve Banks provide a wide range of important services to depository institutions and to the U.S. government.

The interest rate that a bank must pay to borrow from its regional federal reserve bank is called

A (n) ____________________ is necessary for the monetary system to carry out the financial function of transferring money, which in turn is a requirement for an effective financial system.

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