Question 1

Under the European System of Central Banks,the Governing Council is similar in structure to the ________ of the Federal Reserve System.

Accepted Answer

A) Board of Governors 
B) Federal Open Market Committee 
C) Federal Reserve Banks 
D) Federal Advisory Council 
A) Board of Governors 
B) Federal Open Market Committee 
C) Federal Reserve Banks 
D) Federal Advisory Council

Question 2

Explain two concepts of central bank independence.Is the Fed politically independent? Why do economists think central bank independence is important?

Accepted Answer

Instrument independence is the ability o

Question 3

The ability of a central bank to set monetary policy instruments 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 4

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.

Question 5

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 6

Prior to 1980,member banks left the Federal Reserve System due to

Accepted Answer

A) the high cost of discount loans. 
B) the high cost of required reserves. 
C) a desire to avoid interest rate regulations. 
D) a desire to avoid credit controls. 
A) the high cost of discount loans. 
B) the high cost of required reserves. 
C) a desire to avoid interest rate regulations. 
D) a desire to avoid credit controls.

Question 7

Each governor on the Board of Governors can serve

Accepted Answer

A) only one nonrenewable fourteen-year term. 
B) one full nonrenewable fourteen-year term plus part of another term. 
C) only one nonrenewable eight-year term. 
D) one full nonrenewable eight-year term plus part of another term. 
A) only one nonrenewable fourteen-year term. 
B) one full nonrenewable fourteen-year term plus part of another term. 
C) only one nonrenewable eight-year term. 
D) one full nonrenewable eight-year term plus part of another term.

Question 8

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 9

Which of the following statements about central bank structure and independence is TRUE?

Accepted Answer

A) In recent years,with the exception of the Bank of England and the Bank of Japan,most countries have reduced the independence of their central banks,subjecting them to greater democratic control. 
B) Before the Bank of England was granted greater independence,the Federal Reserve was the most independent of the world's central banks. 
C) Both theory and experience suggest that more independent central banks produce better monetary policy. 
D) While the European Central Bank is independent,it is not as independent as the Federal Reserve. 
A) In recent years,with the exception of the Bank of England and the Bank of Japan,most countries have reduced the independence of their central banks,subjecting them to greater democratic control. 
B) Before the Bank of England was granted greater independence,the Federal Reserve was the most independent of the world's central banks. 
C) Both theory and experience suggest that more independent central banks produce better monetary policy. 
D) While the European Central Bank is independent,it is not as independent as the Federal Reserve.

Question 10

The Federal Reserve entity that makes decisions regarding the conduct of open market operations is the

Accepted Answer

A) Board of Governors. 
B) chairman of the Board of Governors. 
C) Federal Open Market Committee. 
D) Open Market Advisory Council 
A) Board of Governors. 
B) chairman of the Board of Governors. 
C) Federal Open Market Committee. 
D) Open Market Advisory Council

Question 11

The three largest Federal Reserve banks (New York,Chicago,and San Francisco)combined hold more than ________ percent of the assets of the Federal Reserve System.

Accepted Answer

A) 25 
B) 33 
C) 50 
D) 67 
A) 25 
B) 33 
C) 50 
D) 67

Question 12

The Federal Reserve Bank of ________ houses the open market desk.

Accepted Answer

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

Question 13

Although reserve requirements and the discount rate are not actually set by the ________,decisions concerning these policy tools are effectively made there.

Accepted Answer

A) Federal Reserve Bank of New York 
B) Board of Governors 
C) Federal Open Market Committee 
D) Federal Reserve Banks 
A) Federal Reserve Bank of New York 
B) Board of Governors 
C) Federal Open Market Committee 
D) Federal Reserve Banks

Question 14

Which of the followings is a 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) regulating credit with the approval of the president under the Credit Control Act of 1969 
D) All governors advise the president of the United States on economic policy. 
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) regulating credit with the approval of the president under the Credit Control Act of 1969 
D) All governors advise the president of the United States on economic policy.

Question 15

The oldest central bank,having been founded in 1694,is the

Accepted Answer

A) Bank of England. 
B) Deutsche Bundesbank. 
C) Bank of Japan. 
D) Federal Reserve System. 
A) Bank of England. 
B) Deutsche Bundesbank. 
C) Bank of Japan. 
D) Federal Reserve System.

Question 16

Goal independence is the ability of ________ to set monetary policy ________.

Accepted Answer

A) the central bank;goals 
B) Congress;goals 
C) Congress;instruments 
D) the central bank;instruments 
A) the central bank;goals 
B) Congress;goals 
C) Congress;instruments 
D) the central bank;instruments

Question 17

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 18

Recent research indicates that inflation performance (low inflation)has been found to be best in countries with

Accepted Answer

A) the most independent central banks. 
B) political control of monetary policy. 
C) money financing of budget deficits. 
D) a policy of always keeping interest rates low. 
A) the most independent central banks. 
B) political control of monetary policy. 
C) money financing of budget deficits. 
D) a policy of always keeping interest rates low.

Question 19

Each Federal Reserve bank has nine directors.Of these ________ are appointed by the member banks and ________ are appointed by the Board of Governors.

Accepted Answer

A) three;six 
B) four;five 
C) five;four 
D) six;three 
A) three;six 
B) four;five 
C) five;four 
D) six;three

Question 20

Banks subject to reserve requirements set by the Federal Reserve System include

Accepted Answer

A) only nationally chartered banks. 
B) only banks with assets less than $100 million. 
C) only banks with assets less than $500 million. 
D) all banks whether or not they are members of the Federal Reserve System. 
A) only nationally chartered banks. 
B) only banks with assets less than $100 million. 
C) only banks with assets less than $500 million. 
D) all banks whether or not they are members of the Federal Reserve System.

Exam 13: Central Banks and the Federal Reserve System

Under the European System of Central Banks,the Governing Council is similar in structure to the ________ of the Federal Reserve System.

Explain two concepts of central bank independence.Is the Fed politically independent? Why do economists think central bank independence is important?

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

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

The First Bank of the United States

Prior to 1980,member banks left the Federal Reserve System due to

Each governor on the Board of Governors can serve

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

Which of the following statements about central bank structure and independence is TRUE?

The Federal Reserve entity that makes decisions regarding the conduct of open market operations is the

The three largest Federal Reserve banks (New York,Chicago,and San Francisco)combined hold more than ________ percent of the assets of the Federal Reserve System.

The Federal Reserve Bank of ________ houses the open market desk.

Although reserve requirements and the discount rate are not actually set by the ________,decisions concerning these policy tools are effectively made there.

Which of the followings is a duty of the Board of Governors of the Federal Reserve System?

The oldest central bank,having been founded in 1694,is the

Goal independence is the ability of ________ to set monetary policy ________.

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

Recent research indicates that inflation performance (low inflation)has been found to be best in countries with

Each Federal Reserve bank has nine directors.Of these ________ are appointed by the member banks and ________ are appointed by the Board of Governors.

Banks subject to reserve requirements set by the Federal Reserve System include

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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Web 5:conflicts of Interest in the Financial Services Industry

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

Goal independence is the ability of to set monetary policy .

Each Federal Reserve bank has nine directors.Of these are appointed by the member banks and are appointed by the Board of Governors.