Question 1

The Federal Reserve influences the Federal Funds interest rate by:

Accepted Answer

A)  Changing the demand for reserves 
B)  Making changes in reserve requirements on a monthly basis 
C)  Changing the stock of nonborrowed reserves through open market operations 
D)  Selling discount window loans and advances 
E)  None of the above 
A)  Changing the demand for reserves 
B)  Making changes in reserve requirements on a monthly basis 
C)  Changing the stock of nonborrowed reserves through open market operations 
D)  Selling discount window loans and advances 
E)  None of the above C

Question 2

Frequently the Federal Reserve System has been forced to carry the burden of economic policy almost totally alone.

Accepted Answer

A) True 
 B)False  True

Question 3

A Federal Reserve purchase or sale of securities in answer to a request from a foreign institution is referred to as a foreign portfolio switch at the Federal Reserve.

Accepted Answer

A) True 
 B)False  False

Question 4

The Federal Reserve will be able to commence adjusting reserve requirements downward even going to zero reserve is required in the year

Accepted Answer

A)  2009 
B)  2010 
C)  2011 
D)  2012 
E)  2015 
A)  2009 
B)  2010 
C)  2011 
D)  2012 
E)  2015

Question 5

If the Federal Reserve purchases securities on behalf of a foreign central bank and adds them to its own portfolio U.S. bank reserves will fall.

Accepted Answer

A) True 
 B)False

Question 6

The central bank that affects reserves available in the financial system by moving government deposits between the central bank and private banks is the:

Accepted Answer

A)  Bank of Mexico 
B)  Bank of Japan 
C)  Bank of Canada 
D)  Bank of Italy 
E)  None of the above 
A)  Bank of Mexico 
B)  Bank of Japan 
C)  Bank of Canada 
D)  Bank of Italy 
E)  None of the above

Question 7

Today in the U.S. legal reserves apply only to checkable-type deposits and are gradually being reduced.

Accepted Answer

A) True 
 B)False

Question 8

The difference between where the nation's GDP is and the potential GDP is referred to as the

Accepted Answer

A)  GDP gap 
B)  GDP potential 
C)  Natural GDP 
D)  All of the above 
E)  None of the above 
A)  GDP gap 
B)  GDP potential 
C)  Natural GDP 
D)  All of the above 
E)  None of the above

Question 9

Between July 1, 2004 in July 1, 2006 the Federal Reserve raised the federal funds interest rate from 1% to 5 1/4 percent in 17 incremental steps.

Accepted Answer

A) True 
 B)False

Question 10

First National Bank of Elderidge borrowed $550,000 from the Federal Reserve Bank of St. Louis last Friday. The bank received short-term adjustment credit for 3 days and plans to repay its loan at the close of business Monday. Show the proper accounting (T-account) entries for this transaction when the loan was taken out on Friday and when it is repaid Monday afternoon. How much did total bank reserves rise when this loan was made? Are reserve requirements a factor here?

Accepted Answer

Fed Loan is Taken Out
Fed. Res. Bank Com

Question 11

Regulations G, T and U contain the rules for the conduct of:

Accepted Answer

A)  Open market operations 
B)  Reserve requirements 
C)  Margin requirements 
D)  Moral suasion 
E)  None of the above 
A)  Open market operations 
B)  Reserve requirements 
C)  Margin requirements 
D)  Moral suasion 
E)  None of the above

Question 12

Describe the relationship between the SOMA manager and the FOMC. What is a policy directive? What types of policy targets does the Federal Reserve use?

Accepted Answer

The System Open Market Account (SOMA) ma

Question 13

The Federal Reserve's power to limit the amount of credit that may be used to purchase stocks and bonds is referred to as:

Accepted Answer

A)  Regulation Q 
B)  Moral suasion 
C)  Open-market requirements 
D)  Announcement effect 
E)  None of the above 
A)  Regulation Q 
B)  Moral suasion 
C)  Open-market requirements 
D)  Announcement effect 
E)  None of the above

Question 14

The principal immediate target of policy for most central banks consists of:

Accepted Answer

A)  The volume of reserves available to the banking system 
B)  Influencing interest rates via open-market operations 
C)  Fighting inflation and unemployment 
D)  All of the above 
E)  None of the above 
A)  The volume of reserves available to the banking system 
B)  Influencing interest rates via open-market operations 
C)  Fighting inflation and unemployment 
D)  All of the above 
E)  None of the above

Question 15

The Employment Act of 1946 committed the federal government to:

Accepted Answer

A)  Minimizing unemployment 
B)  Reducing inflation 
C)  Reducing balance of payments deficits 
D)  Defending the dollar 
E)  None of the above 
A)  Minimizing unemployment 
B)  Reducing inflation 
C)  Reducing balance of payments deficits 
D)  Defending the dollar 
E)  None of the above

Question 16

An increase in goods purchased from foreign countries causes:

Accepted Answer

A)  The value of the dollar to fall 
B)  The value of the dollar to rise 
C)  An equilibrium balance of payments position 
D)  All of the above 
E)  None of the above 
A)  The value of the dollar to fall 
B)  The value of the dollar to rise 
C)  An equilibrium balance of payments position 
D)  All of the above 
E)  None of the above

Question 17

The principal immediate target of policy for most central banks consists of the volume of reserves available to the banking system. The total supply of reserves can be changed by:

Accepted Answer

A)  Conducting open-market operations 
B)  Making loans to depository institutions through a credit or discount window 
C)  Changing the legal reserve requirements applicable to deposit 
D)  All of the above 
E)  Choices A and B only 
A)  Conducting open-market operations 
B)  Making loans to depository institutions through a credit or discount window 
C)  Changing the legal reserve requirements applicable to deposit 
D)  All of the above 
E)  Choices A and B only

Question 18

Increases in public holdings of "pocket money"
would result in a drawing down of legal reserves in the banking system unless the Federal Reserve offsets the additional public demand with open-market sales of securities.

Accepted Answer

A) True 
 B)False

Question 19

A period of falling interest rates usually results in a rise in bank borrowings at the discount window.

Accepted Answer

A) True 
 B)False

Question 20

The type of open-market operation that results in the U.S. Treasury redeeming securities for cash with the
Federal Reserve System is known as a(n):

Accepted Answer

A)  Outright or straight transaction 
B)  RP or Reverse RP transaction 
C)  Bills only transaction 
D)  Agency 
E)  None of the above 
A)  Outright or straight transaction 
B)  RP or Reverse RP transaction 
C)  Bills only transaction 
D)  Agency 
E)  None of the above

Exam 13: The Tools and Goals of Central Bank Monetary Policy

The Federal Reserve influences the Federal Funds interest rate by:

Frequently the Federal Reserve System has been forced to carry the burden of economic policy almost totally alone.

A Federal Reserve purchase or sale of securities in answer to a request from a foreign institution is referred to as a foreign portfolio switch at the Federal Reserve.

The Federal Reserve will be able to commence adjusting reserve requirements downward even going to zero reserve is required in the year

If the Federal Reserve purchases securities on behalf of a foreign central bank and adds them to its own portfolio U.S. bank reserves will fall.

The central bank that affects reserves available in the financial system by moving government deposits between the central bank and private banks is the:

Today in the U.S. legal reserves apply only to checkable-type deposits and are gradually being reduced.

The difference between where the nation's GDP is and the potential GDP is referred to as the

Between July 1, 2004 in July 1, 2006 the Federal Reserve raised the federal funds interest rate from 1% to 5 1/4 percent in 17 incremental steps.

Regulations G, T and U contain the rules for the conduct of:

Describe the relationship between the SOMA manager and the FOMC. What is a policy directive? What types of policy targets does the Federal Reserve use?

The Federal Reserve's power to limit the amount of credit that may be used to purchase stocks and bonds is referred to as:

The principal immediate target of policy for most central banks consists of:

The Employment Act of 1946 committed the federal government to:

An increase in goods purchased from foreign countries causes:

The principal immediate target of policy for most central banks consists of the volume of reserves available to the banking system. The total supply of reserves can be changed by:

Increases in public holdings of "pocket money" would result in a drawing down of legal reserves in the banking system unless the Federal Reserve offsets the additional public demand with open-market sales of securities.

A period of falling interest rates usually results in a rise in bank borrowings at the discount window.

The type of open-market operation that results in the U.S. Treasury redeeming securities for cash with the Federal Reserve System is known as a(n):

Functions and Roles of the Financial System in the Global Economy

Financial Assets, Money, Financial Transactions, and Financial Institutions

The Financial Information Marketplace

The Future of the Financial System and the Money and Capital Markets

The Determinants of Interest Rates: Competing Ideas

Measuring and Calculating Interest Rates and Financial Asset Prices

Inflation and Deflation, Yield Curves, and Duration: Impact on Interest Rates and Asset Prices

The Risk Structure of Interest Rates: Defaults, Prepayments, Taxes, and Other Rate-Determining Factors

Interest-Rate Forecasting and Hedging: Swaps, Financial Futures, and Options

Introduction to the Money Market and the Roles Played by Governments and Security Dealers

Commercial Banks, Major Corporations, and Federal Credit Agencies in the Money Market

Roles and Services of the Federal Reserve and Other Central Banks Around the World

The Commercial Banking Industry: Structure, Products, and Management

Nonbank Thrift Institutions: Savings and Loans, Savings Banks, Credit Unions, and Money Market Funds

Mutual Funds, Insurance Companies, Investment Banks, and Other Financial Firms

Regulation of the Financial Institutions Sector

Federal, State, and Local Governments Operating in the Financial Markets

Business Borrowing: Corporate Bonds, Asset-Backed Securities, Bank Loans, and Other Forms of Business Debt

The Market for Corporate

Consumer Lending and Borrowing

The Residential Mortgage Market Stock

International Transactions and Currency Values

International Banking

Filters