Exam 12: Exploring Central Banks and Their Impact on the Economy and Financial System

Central banks can use their policy tools to affect money supply growth and credit availability but not the prices of securities.

The country whose central bank operates under the greatest freedom from government control is:

All members of the Federal Open Market Committee have voting power with the Chairman of the Federal Reserve Board having the power to cast tie-breaking vote on any monetary policy decision.

The dollar volume of deposits that the banking system can create for each new dollar of excess legal reserves injected into the banking system is known as:

If the Federal Reserve requires a reserve requirement, RR, equal to 10% and the bank has found an excess of $1,000,000 in reserves, then the bank could absorb an additional deposits and loans equal to:

The principal policy tool used by the Bank of England to influence economic and financial conditions is:

The most important function of the central banking system is:

By December of 2009, the assets recorded on the Fed's balance sheet was about:

The role of the Board of Governors is to resolve policy disputes among member banks.

Which of the following statements is/are true of the money multiplier?

The monetary base is a principal determinant of the nation's money supply. The monetary base is:

If the central bank raises interest rates, there will be a reduction in the value of financial assets.

Which of the following is not a goal of the central bank?

The Federal Reserve banks were not allowed to change their discount rate when the central bank was chartered; this power was acquired later with passage of the Glass-Steagall Act.

It is possible to have at least 2 members of the Federal Reserve Board from the State of New York.

Suppose the monetary base is $300 billion, the money multiplier is 3. By how much must the Fed increase the monetary base to achieve a money supply of $1500 billion?

The link between the quantity of high-powered money that the Fed controls and the M2 measure of the money supply, which is an important factor in determining the rate at which the nominal GDP grows is referred to as:

The Bank of England is:

The principal goal of the ECB, as defined by the Masstricht Treaty is to protect the value of the Euro.

Central banks usually offer some services directly to the public as well as to banks and securities dealers.