Question 1

The Chairman of the Board of Governors is chosen from among the seven governors and serves a ________ 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 2

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 3

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 4

Critics of the current system of Fed independence contend that

Accepted Answer

A)  the current system is undemocratic. 
B)  voters have too much say about monetary policy. 
C)  the president has too much control over monetary policy on a day-to-day basis. 
D)  the Board of Governors is held responsible for policy missteps. 
A)  the current system is undemocratic. 
B)  voters have too much say about monetary policy. 
C)  the president has too much control over monetary policy on a day-to-day basis. 
D)  the Board of Governors is held responsible for policy missteps.

Question 5

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

Question 6

The Federal Reserve Banks are ________ institutions since they are owned by the ________.

Accepted Answer

A)  quasi-public; private commercial banks in the district where the Reserve Bank is located 
B)  public; private commercial banks in the district where the Reserve Bank is located 
C)  quasi-public; Board of Governors 
D)  public; Board of Governors 
A)  quasi-public; private commercial banks in the district where the Reserve Bank is located 
B)  public; private commercial banks in the district where the Reserve Bank is located 
C)  quasi-public; Board of Governors 
D)  public; Board of Governors

Question 7

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 8

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 9

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 10

Which of the following functions is not performed by any of the twelve regional Federal Reserve Banks?

Accepted Answer

A)  Check clearing 
B)  Conducting economic research 
C)  Setting interest rates payable on time deposits 
D)  Issuing new currency 
A)  Check clearing 
B)  Conducting economic research 
C)  Setting interest rates payable on time deposits 
D)  Issuing new currency

Question 11

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 12

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 13

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 14

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 15

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 16

Which of the following is NOT an entity of the Federal Reserve System?

Accepted Answer

A)  Federal Reserve Banks 
B)  The Comptroller of the Currency 
C)  The Board of Governors 
D)  The Federal Open Market Committee 
A)  Federal Reserve Banks 
B)  The Comptroller of the Currency 
C)  The Board of Governors 
D)  The Federal Open Market Committee

Question 17

Although neither ________ nor the ________ are officially set by the Federal Open Market Committee,decisions concerning these policy tools are effectively made by the committee.

Accepted Answer

A)  margin requirements; discount rate 
B)  margin requirements; federal funds rate 
C)  reserve requirements; discount rate 
D)  reserve requirements; federal funds rate 
A)  margin requirements; discount rate 
B)  margin requirements; federal funds rate 
C)  reserve requirements; discount rate 
D)  reserve requirements; federal funds rate

Question 18

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 19

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 20

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.

Exam 13: Central Banks and the Federal Reserve System

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

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

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

Critics of the current system of Fed independence contend that

The Governing Council usually meets ________ times a year.

The Federal Reserve Banks are ________ institutions since they are owned by the ________.

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

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

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.

Which of the following functions is not performed by any of the twelve regional Federal Reserve Banks?

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

An important function of the regional Federal Reserve Banks is

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

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

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

Which of the following is NOT an entity of the Federal Reserve System?

Although neither ________ nor the ________ are officially set by the Federal Open Market Committee,decisions concerning these policy tools are effectively made by the committee.

The teal book is the Fed research document containing

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

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

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

Goal independence is the ability of to set monetary policy .

The Federal Reserve Banks are institutions since they are owned by the .

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.

Although neither nor the are officially set by the Federal Open Market Committee,decisions concerning these policy tools are effectively made by the committee.

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