Question 1

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. B

Question 2

The theory of bureaucratic behavior suggests that the objective of a bureaucracy is to maximize

Accepted Answer

A) the public's welfare. 
B) profits. 
C) its own welfare. 
D) conflict with the executive and legislative branches of government. 
A) the public's welfare. 
B) profits. 
C) its own welfare. 
D) conflict with the executive and legislative branches of government. C

Question 3

Members of Congress are able to influence monetary policy,albeit indirectly,through their ability to

Accepted Answer

A) withhold appropriations from the Board of Governors. 
B) withhold appropriations from the Federal Open Market Committee. 
C) propose legislation that would force the Fed to submit budget requests to Congress,as must other government agencies. 
D) instruct the General Accounting Office to audit the foreign exchange market functions of the Federal Reserve. 
A) withhold appropriations from the Board of Governors. 
B) withhold appropriations from the Federal Open Market Committee. 
C) propose legislation that would force the Fed to submit budget requests to Congress,as must other government agencies. 
D) instruct the General Accounting Office to audit the foreign exchange market functions of the Federal Reserve. C

Question 4

The president from which Federal Reserve Bank always has a vote in the Federal Open Market Committee?

Accepted Answer

A) Philadelphia 
B) Boston 
C) San Francisco 
D) New York 
A) Philadelphia 
B) Boston 
C) San Francisco 
D) New York

Question 5

Each Fed bank president attends FOMC meetings;although only ________ Fed bank presidents vote on policy,all ________ provide input.

Accepted Answer

A) three;ten 
B) five;ten 
C) three;twelve 
D) five;twelve 
A) three;ten 
B) five;ten 
C) three;twelve 
D) five;twelve

Question 6

While the discount rate is "established" by the regional Federal Reserve Banks,in truth,the rate is determined by

Accepted Answer

A) Congress. 
B) the president of the United States. 
C) the Senate. 
D) the Board of Governors. 
A) Congress. 
B) the president of the United States. 
C) the Senate. 
D) the Board of Governors.

Question 7

Subject to the approval of the Board of Governors,the decision of choosing the president of a district Federal Reserve Bank is made by

Accepted Answer

A) all nine district bank directors. 
B) the six district bank directors elected by the member banks. 
C) three district bank directors who are professional bankers. 
D) district bank directors who are not professional bankers. 
E) class A and class B directors. 
A) all nine district bank directors. 
B) the six district bank directors elected by the member banks. 
C) three district bank directors who are professional bankers. 
D) district bank directors who are not professional bankers. 
E) class A and class B directors.

Question 8

The teal book is the Fed research document containing

Accepted Answer

A) the forecast of national economic variables for the next three years. 
B) forecasts of the money aggregates conditional on different monetary policy stances. 
C) information on the state of the economy in each Federal Reserve district. 
D) both A and B. 
E) A,B and C. 
A) the forecast of national economic variables for the next three years. 
B) forecasts of the money aggregates conditional on different monetary policy stances. 
C) information on the state of the economy in each Federal Reserve district. 
D) both A and B. 
E) A,B and C.

Question 9

Who are the voting members of the Federal Open Market Committee and why is this committee important? Where does the power lie within this committee?

Accepted Answer

The FOMC determines the monetary policy

Question 10

There are ________ members of the Board of Governors of the Federal Reserve System.

Accepted Answer

A) 5 
B) 7 
C) 12 
D) 19 
A) 5 
B) 7 
C) 12 
D) 19

Question 11

Which of the followings is NOT a current duty of the Board of Governors of the Federal Reserve System?

Accepted Answer

A) setting margin requirements,the fraction of the purchase price of the securities that has to be paid for with cash 
B) setting the maximum interest rates payable on certain types of time deposits under Regulation Q 
C) approving the discount rate "established" by the Federal Reserve banks 
D) voting on the conduct of open market operations 
A) setting margin requirements,the fraction of the purchase price of the securities that has to be paid for with cash 
B) setting the maximum interest rates payable on certain types of time deposits under Regulation Q 
C) approving the discount rate "established" by the Federal Reserve banks 
D) voting on the conduct of open market operations

Question 12

The ability of a central bank to set monetary policy goals 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

An important function of the regional Federal Reserve Banks is

Accepted Answer

A) setting reserve requirements. 
B) clearing checks. 
C) determining monetary policy. 
D) setting margin requirements. 
A) setting reserve requirements. 
B) clearing checks. 
C) determining monetary policy. 
D) setting margin requirements.

Question 14

The First Bank of the United States

Accepted Answer

A) was disbanded in 1811 when its charter was not renewed. 
B) had its charter renewal vetoed in 1832. 
C) was fundamental in helping the Federal Government finance the War of 1812. 
D) None of the above. 
A) was disbanded in 1811 when its charter was not renewed. 
B) had its charter renewal vetoed in 1832. 
C) was fundamental in helping the Federal Government finance the War of 1812. 
D) None of the above.

Question 15

What makes the Federal Reserve so unique compared to other central banks around the world is its

Accepted Answer

A) centralized structure. 
B) decentralized structure. 
C) regulatory functions. 
D) monetary policy functions. 
A) centralized structure. 
B) decentralized structure. 
C) regulatory functions. 
D) monetary policy functions.

Question 16

The nine directors of the Federal Reserve Banks are split into three categories: ________ are professional bankers,________ are leaders from industry,and ________ are to represent the public interest and are not allowed to be officers,employees,or stockholders of banks.

Accepted Answer

A) 5;2;2 
B) 2;5;2 
C) 4;2;3 
D) 3;3;3 
A) 5;2;2 
B) 2;5;2 
C) 4;2;3 
D) 3;3;3

Question 17

The case for Federal Reserve independence does NOT include the idea that

Accepted Answer

A) political pressure would impart an inflationary bias to monetary policy. 
B) a politically insulated Fed would be more concerned with long-run objectives and thus be a defender of a sound dollar and a stable price level. 
C) policy is always performed better by an elite group such as the Fed. 
D) a Federal Reserve under the control of Congress or the president might make the so-called political business cycle more pronounced. 
A) political pressure would impart an inflationary bias to monetary policy. 
B) a politically insulated Fed would be more concerned with long-run objectives and thus be a defender of a sound dollar and a stable price level. 
C) policy is always performed better by an elite group such as the Fed. 
D) a Federal Reserve under the control of Congress or the president might make the so-called political business cycle more pronounced.

Question 18

The Fed's support of the Depository Institutions Deregulation and Monetary Control Act of 1980 stemmed in part from its

Accepted Answer

A) concern over declining Fed membership. 
B) belief that all banking regulations should be eliminated. 
C) belief that interest rate ceilings were too high. 
D) belief that depositors had to become more knowledgeable of banking operations. 
A) concern over declining Fed membership. 
B) belief that all banking regulations should be eliminated. 
C) belief that interest rate ceilings were too high. 
D) belief that depositors had to become more knowledgeable of banking operations.

Question 19

The theory of bureaucratic behavior when applied to the Fed helps to explain why the Fed

Accepted Answer

A) was supportive of congressional attempts to limit the central bank's autonomy. 
B) was so secretive about the conduct of future monetary policy. 
C) sought less control over banks in the 1980s. 
D) was willing to take on powerful groups that may threaten its autonomy. 
A) was supportive of congressional attempts to limit the central bank's autonomy. 
B) was so secretive about the conduct of future monetary policy. 
C) sought less control over banks in the 1980s. 
D) was willing to take on powerful groups that may threaten its autonomy.

Question 20

The Governing Council usually meets ________ times a year.

Accepted Answer

A) four 
B) six 
C) eight 
D) twelve 
A) four 
B) six 
C) eight 
D) twelve

Exam 13: Central Banks and the Federal Reserve System

Regarding central bank independence

The theory of bureaucratic behavior suggests that the objective of a bureaucracy is to maximize

Members of Congress are able to influence monetary policy,albeit indirectly,through their ability to

The president from which Federal Reserve Bank always has a vote in the Federal Open Market Committee?

Each Fed bank president attends FOMC meetings;although only ________ Fed bank presidents vote on policy,all ________ provide input.

While the discount rate is "established" by the regional Federal Reserve Banks,in truth,the rate is determined by

Subject to the approval of the Board of Governors,the decision of choosing the president of a district Federal Reserve Bank is made by

The teal book is the Fed research document containing

Who are the voting members of the Federal Open Market Committee and why is this committee important? Where does the power lie within this committee?

There are ________ members of the Board of Governors of the Federal Reserve System.

Which of the followings is NOT a current duty of the Board of Governors of the Federal Reserve System?

The ability of a central bank to set monetary policy goals is

An important function of the regional Federal Reserve Banks is

The First Bank of the United States

What makes the Federal Reserve so unique compared to other central banks around the world is its

The nine directors of the Federal Reserve Banks are split into three categories: ________ are professional bankers,________ are leaders from industry,and ________ are to represent the public interest and are not allowed to be officers,employees,or stockholders of banks.

The case for Federal Reserve independence does NOT include the idea that

The Fed's support of the Depository Institutions Deregulation and Monetary Control Act of 1980 stemmed in part from its

The theory of bureaucratic behavior when applied to the Fed helps to explain why the Fed

The Governing Council usually meets ________ times a year.

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

The Meaning of Interest Rates

The Behavior 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

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Financial Crises

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

Financial Crises in Emerging Market Economies

The ISLM Model

Filters

Each Fed bank president attends FOMC meetings;although only Fed bank presidents vote on policy,all provide input.

The nine directors of the Federal Reserve Banks are split into three categories: are professional bankers, are leaders from industry,and are to represent the public interest and are not allowed to be officers,employees,or stockholders of banks.