Question 1

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 D

Question 2

The Depository Institutions Deregulation and Monetary Control Act of 1980

Accepted Answer

A) established higher reserve requirements for nonmember than for member banks. 
B) established higher reserve requirements for member than for nonmember banks. 
C) abolished reserve requirements. 
D) established uniform reserve requirements for all banks. 
A) established higher reserve requirements for nonmember than for member banks. 
B) established higher reserve requirements for member than for nonmember banks. 
C) abolished reserve requirements. 
D) established uniform reserve requirements for all banks. D

Question 3

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 B

Question 4

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 5

The trend in recent years is that more and more governments

Accepted Answer

A) have been granting greater independence to their central banks. 
B) have been reducing the independence of their central banks to make them more accountable for poor economic performance. 
C) have mandated that their central banks focus on controlling inflation. 
D) have required their central banks to cooperate more with their Ministers of Finance. 
A) have been granting greater independence to their central banks. 
B) have been reducing the independence of their central banks to make them more accountable for poor economic performance. 
C) have mandated that their central banks focus on controlling inflation. 
D) have required their central banks to cooperate more with their Ministers of Finance.

Question 6

The central bank which is generally regarded as the most independent in the world because its charter cannot be changed by legislation is the

Accepted Answer

A) Bank of England. 
B) Bank of Canada. 
C) European Central Bank. 
D) Bank of Japan. 
A) Bank of England. 
B) Bank of Canada. 
C) European Central Bank. 
D) Bank of Japan.

Question 7

While legislation enacted in 1998 granted the Bank of Japan new powers and greater autonomy,its critics contend that its independence is

Accepted Answer

A) limited by the Ministry of Finance's veto power over a portion of its budget. 
B) too great because it need not pursue a policy of price stability even if that is the popular will of the people. 
C) too great since the Ministry of Finance no longer has veto power over the bank's budget. 
D) limited since the Ministry of Finance can dismiss senior bank officials. 
A) limited by the Ministry of Finance's veto power over a portion of its budget. 
B) too great because it need not pursue a policy of price stability even if that is the popular will of the people. 
C) too great since the Ministry of Finance no longer has veto power over the bank's budget. 
D) limited since the Ministry of Finance can dismiss senior bank officials.

Question 8

The political business cycle refers to the phenomenon that just before elections,politicians enact ________ policies.After the elections,the bad effects of these policies (for example,________ )have to be counteracted with ________ policies.

Accepted Answer

A) expansionary;higher unemployment;contractionary 
B) expansionary;a higher inflation rate;contractionary 
C) contractionary;higher unemployment;expansionary 
D) contractionary;a higher inflation rate;expansionary 
A) expansionary;higher unemployment;contractionary 
B) expansionary;a higher inflation rate;contractionary 
C) contractionary;higher unemployment;expansionary 
D) contractionary;a higher inflation rate;expansionary

Question 9

The strongest argument for an independent Federal Reserve rests on the view that subjecting the Fed to more political pressures would impart

Accepted Answer

A) an inflationary bias to monetary policy. 
B) a deflationary bias to monetary policy. 
C) a disinflationary bias to monetary policy. 
D) a countercyclical bias to monetary policy. 
A) an inflationary bias to monetary policy. 
B) a deflationary bias to monetary policy. 
C) a disinflationary bias to monetary policy. 
D) a countercyclical bias to monetary policy.

Question 10

Which of the following is an entity of the Federal Reserve System?

Accepted Answer

A) the U.S.Treasury Secretary 
B) the FOMC 
C) the Comptroller of the Currency 
D) the FDIC 
A) the U.S.Treasury Secretary 
B) the FOMC 
C) the Comptroller of the Currency 
D) the FDIC

Question 11

Explain the similarities and differences between the European System of Central Banks and the Federal Reserve System.

Accepted Answer

The similarities between the two are in

Question 12

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 13

On paper,the Bank of Canada has ________ instrument independence and ________ goal independence when compared to the Federal Reserve System.

Accepted Answer

A) less;less 
B) less;more 
C) more;less 
D) more;more 
A) less;less 
B) less;more 
C) more;less 
D) more;more

Question 14

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 15

The financial panic of 1907 resulted in such widespread bank failures and substantial losses to depositors that the American public finally became convinced that

Accepted Answer

A) the First Bank of the United States had failed to serve as a lender of last resort. 
B) the Second Bank of the United States had failed to serve as a lender of last resort. 
C) the Federal Reserve System had failed to serve as a lender of last resort. 
D) a central bank was needed to prevent future panics. 
A) the First Bank of the United States had failed to serve as a lender of last resort. 
B) the Second Bank of the United States had failed to serve as a lender of last resort. 
C) the Federal Reserve System had failed to serve as a lender of last resort. 
D) a central bank was needed to prevent future panics.

Question 16

The Chairman of the Board of Governors is chosen from among the seven governors and serves a ________,renewable term.

Accepted Answer

A) one-year 
B) two-year 
C) four-year 
D) eight-year 
A) one-year 
B) two-year 
C) four-year 
D) eight-year

Question 17

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 18

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 19

The Federal Open Market Committee consists of the

Accepted Answer

A) five senior members of the seven-member Board of Governors. 
B) seven members of the Board of Governors and seven presidents of the regional Fed banks. 
C) seven members of the Board of Governors and five presidents of the regional Fed banks. 
D) twelve regional Fed bank presidents and the chairman of the Board of Governors. 
A) five senior members of the seven-member Board of Governors. 
B) seven members of the Board of Governors and seven presidents of the regional Fed banks. 
C) seven members of the Board of Governors and five presidents of the regional Fed banks. 
D) twelve regional Fed bank presidents and the chairman of the Board of Governors.

Question 20

Which of the following statements comparing the European System of Central Banks and the Federal Reserve System is TRUE?

Accepted Answer

A) The budgets of the Federal Reserve Banks are controlled by the Board of Governors,while the National Central Banks control their own budgets and the budget of the European Central Bank. 
B) The European Central Bank has similar power over the National Central Banks when compared to the level of power the Board of Governors has over the Federal Reserve Banks. 
C) Just like the Federal Reserve System,monetary operations are centralized in the European System of Central Banks with the European Central Bank. 
D) The European Central Bank's involvement in supervision and regulation of financial institutions is comparable to the Board of Governors' involvement. 
A) The budgets of the Federal Reserve Banks are controlled by the Board of Governors,while the National Central Banks control their own budgets and the budget of the European Central Bank. 
B) The European Central Bank has similar power over the National Central Banks when compared to the level of power the Board of Governors has over the Federal Reserve Banks. 
C) Just like the Federal Reserve System,monetary operations are centralized in the European System of Central Banks with the European Central Bank. 
D) The European Central Bank's involvement in supervision and regulation of financial institutions is comparable to the Board of Governors' involvement.

Exam 13: Central Banks and the Federal Reserve System

The Governing Council usually meets ________ times a year.

The Depository Institutions Deregulation and Monetary Control Act of 1980

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

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

The trend in recent years is that more and more governments

The central bank which is generally regarded as the most independent in the world because its charter cannot be changed by legislation is the

While legislation enacted in 1998 granted the Bank of Japan new powers and greater autonomy,its critics contend that its independence is

The political business cycle refers to the phenomenon that just before elections,politicians enact ________ policies.After the elections,the bad effects of these policies (for example,________ )have to be counteracted with ________ policies.

The strongest argument for an independent Federal Reserve rests on the view that subjecting the Fed to more political pressures would impart

Which of the following is an entity of the Federal Reserve System?

Explain the similarities and differences between the European System of Central Banks and the Federal Reserve System.

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

On paper,the Bank of Canada has ________ instrument independence and ________ goal independence when compared to the Federal Reserve System.

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?

The financial panic of 1907 resulted in such widespread bank failures and substantial losses to depositors that the American public finally became convinced that

The Chairman of the Board of Governors is chosen from among the seven governors and serves a ________,renewable term.

The teal book is the Fed research document containing

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

The Federal Open Market Committee consists of the

Which of the following statements comparing the European System of Central Banks and the Federal Reserve System is TRUE?

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

Web 1:financial Crises in Emerging Market Economies

Web 2:the Islm Model

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The political business cycle refers to the phenomenon that just before elections,politicians enact policies.After the elections,the bad effects of these policies (for example, )have to be counteracted with policies.

On paper,the Bank of Canada has instrument independence and goal independence when compared to the Federal Reserve System.