Question 1

The majority of members of the Federal Open Market Committee are

Accepted Answer

A)  Federal Reserve Bank presidents. 
B)  members of the Federal Advisory Council. 
C)  presidents of member banks. 
D)  the seven Federal Reserve governors. 
A)  Federal Reserve Bank presidents. 
B)  members of the Federal Advisory Council. 
C)  presidents of member banks. 
D)  the seven Federal Reserve governors.

Question 2

Under the European System of Central Banks,the National Central Banks have the same role as 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 3

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.

Question 4

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 5

The Federal Open Market Committee's "balance of risks" is an assessment of whether,in the future,its primary concern will be

Accepted Answer

A)  higher exchange rates or higher unemployment. 
B)  higher inflation or a stronger economy. 
C)  higher inflation or a weaker economy. 
D)  lower inflation or a stronger economy. 
A)  higher exchange rates or higher unemployment. 
B)  higher inflation or a stronger economy. 
C)  higher inflation or a weaker economy. 
D)  lower inflation or a stronger economy.

Question 6

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 7

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 8

The Federal Reserve Bank of ________ plays a special role in the Federal Reserve System because it 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 9

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 10

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 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 is the theory of bureaucratic behavior and how can it be used to explain the behavior of the Federal Reserve?

Accepted Answer

The theory of bureaucratic behavior conc

Question 13

The Federal Open Market Committee usually meets ________ times a year.

Accepted Answer

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

Question 14

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 15

All ________ are required to be members of the Fed.

Accepted Answer

A)  state chartered banks 
B)  nationally chartered banks 
C)  banks with assets less than $100 million 
D)  banks with assets less than $500 million 
A)  state chartered banks 
B)  nationally chartered banks 
C)  banks with assets less than $100 million 
D)  banks with assets less than $500 million

Question 16

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.

Question 17

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 18

In the Governing Council,the decision of what policy to implement is made by

Accepted Answer

A)  majority vote of the Executive Board members. 
B)  majority vote of the heads of the National Banks. 
C)  consensus. 
D)  majority vote of all members of the Governing Council. 
A)  majority vote of the Executive Board members. 
B)  majority vote of the heads of the National Banks. 
C)  consensus. 
D)  majority vote of all members of the Governing Council.

Question 19

The research document given to the Federal Open Market Committee that contains information on the state of the economy in each Federal Reserve district is called the

Accepted Answer

A)  beige book. 
B)  green book. 
C)  blue book. 
D)  black book. 
A)  beige book. 
B)  green book. 
C)  blue book. 
D)  black book.

Question 20

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.

Exam 13: Central Banks and the Federal Reserve System

The majority of members of the Federal Open Market Committee are

Under the European System of Central Banks,the National Central Banks have the same role as the ________ of the Federal Reserve System.

The Depository Institutions Deregulation and Monetary Control Act of 1980

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

The Federal Open Market Committee's "balance of risks" is an assessment of whether,in the future,its primary concern will be

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 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 Federal Reserve Bank of ________ plays a special role in the Federal Reserve System because it houses the open market desk.

The Federal Open Market Committee consists of the

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

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

What is the theory of bureaucratic behavior and how can it be used to explain the behavior of the Federal Reserve?

The Federal Open Market Committee usually meets ________ times a year.

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

All ________ are required to be members of the Fed.

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

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?

In the Governing Council,the decision of what policy to implement is made by

The research document given to the Federal Open Market Committee that contains information on the state of the economy in each Federal Reserve district is called the

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

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

Understanding 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

Financial Crises

Banking and the Management of Financial Institutions

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

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

The ISLM Model

Filters

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

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.