Question 1

The money supply can be contracted by holding the amount of reserves constant but raising the reserve requirement.

Accepted Answer

A) True 
 B)False

Question 2

The Federal Open Market Committee:

Accepted Answer

A) is made up of the presidents of the 12 Federal Reserve Banks 
B) consists of the seven members of the Board of Governors of the Fed,plus five presidents of Reserve Banks 
C) is appointed by the Chairman of the Federal Reserve System 
D) none of the above 
A) is made up of the presidents of the 12 Federal Reserve Banks 
B) consists of the seven members of the Board of Governors of the Fed,plus five presidents of Reserve Banks 
C) is appointed by the Chairman of the Federal Reserve System 
D) none of the above

Question 3

Which of the following is not a method by which the Federal Reserve establishes monetary policy?

Accepted Answer

A) setting reserve requirements, 
B) altering the discount rate, 
C) through federal open market operations, 
D) setting bank profitability ratios, 
E) none of the above 
A) setting reserve requirements, 
B) altering the discount rate, 
C) through federal open market operations, 
D) setting bank profitability ratios, 
E) none of the above

Question 4

Because of the National Banking Act,the volume of national bank notes depends on the government bond market rather than the seasonal or cyclical needs of the nation for currency.

Accepted Answer

A) True 
 B)False

Question 5

All commercial banks are members of the Fed.

Accepted Answer

A) True 
 B)False

Question 6

The Board of Governors publishes ________________,which carries articles of current interest and offers a convenient source of the statistics compiled by the Fed.

Accepted Answer

A) the Federal Reserve Magazine 
B) the Federal Reserve Weekly 
C) the Federal Reserve Journal 
D) the Federal Reserve News 
E) none of the above 
A) the Federal Reserve Magazine 
B) the Federal Reserve Weekly 
C) the Federal Reserve Journal 
D) the Federal Reserve News 
E) none of the above

Question 7

Although it enjoys substantial independence in its operations,the appointive power of the president and the ability of Congress to alter its structure make the ______________ a dependent political structure and one of the most powerful monetary organizations in the world.

Accepted Answer

A) Presidential Appointment Board (PA
B)  
B) Board of Directors (BO
D)  
C) Governing Body (GO
B)  
D) Financial Governors (FOG) 
E) none of the above 
A) Presidential Appointment Board (PA
B)  
B) Board of Directors (BO
D)  
C) Governing Body (GO
B)  
D) Financial Governors (FOG) 
E) none of the above

Question 8

The Consumer Credit Protection Act requires that lenders clearly explain consumer credit costs and prohibited them from charging overly high-priced credit transactions.

Accepted Answer

A) True 
 B)False

Question 9

Open market operations are similar to discount operations in that they increase or decrease bank reserves at the initiative of the Fed.

Accepted Answer

A) True 
 B)False

Question 10

The principal examining activity of the Federal Reserve System is directed to:

Accepted Answer

A) all state-chartered banks 
B) state-chartered member banks 
C) all national banks 
D) foreign banks operating in the United States 
A) all state-chartered banks 
B) state-chartered member banks 
C) all national banks 
D) foreign banks operating in the United States

Question 11

A central bank does not:

Accepted Answer

A) deal directly with the public 
B) necessarily operate for a profit 
C) have stockholders because it is a non-profit organization 
D) hold reserve requirements 
A) deal directly with the public 
B) necessarily operate for a profit 
C) have stockholders because it is a non-profit organization 
D) hold reserve requirements

Question 12

The National Banking Act provides that national banks can issue their own notes only against U.S.government bonds that the banks held on deposit with large city banks.

Accepted Answer

A) True 
 B)False

Question 13

All Federal Reserve Banks have:

Accepted Answer

A) check clearance facilities 
B) branch banks 
C) directors who are elected for 14-year terms 
D) directors who are appointed by the President of the United States 
A) check clearance facilities 
B) branch banks 
C) directors who are elected for 14-year terms 
D) directors who are appointed by the President of the United States

Question 14

Federal Reserve actions that stimulate or repress the level of prices or economic activity are called defensive activities.

Accepted Answer

A) True 
 B)False

Question 15

The Board of Governors of the Federal Reserve System:

Accepted Answer

A) oversee the supervision and regulation of member banks and bank holding companies 
B) regulates reserve balance requirements for depository institutions 
C) oversees the collection and clearance of checks for depository institutions 
D) all the above 
E) none of the above 
A) oversee the supervision and regulation of member banks and bank holding companies 
B) regulates reserve balance requirements for depository institutions 
C) oversees the collection and clearance of checks for depository institutions 
D) all the above 
E) none of the above

Question 16

Which of the following statements would be false? The discount rate is

Accepted Answer

A) an instrument of monetary policy 
B) frequently used as a tool of fiscal policy 
C) regarded as a fine-tuning mechanism 
D) all the above are true 
A) an instrument of monetary policy 
B) frequently used as a tool of fiscal policy 
C) regarded as a fine-tuning mechanism 
D) all the above are true

Question 17

The Board of Governors of the Federal Reserve establishes monetary policy by:

Accepted Answer

A) setting reserve requirements,altering the prime rate,and through federal open market operations. 
B) setting loan to value ratios,altering the discount rate,and through federal open market operations. 
C) setting reserve requirements,altering the discount rate,and through international currency transactions. 
D) setting bank profitability ratios,altering the discount rate,and through federal open market operations. 
E) none of the above 
A) setting reserve requirements,altering the prime rate,and through federal open market operations. 
B) setting loan to value ratios,altering the discount rate,and through federal open market operations. 
C) setting reserve requirements,altering the discount rate,and through international currency transactions. 
D) setting bank profitability ratios,altering the discount rate,and through federal open market operations. 
E) none of the above

Question 18

The Fed has legal responsibility for administering:

Accepted Answer

A) the Bank Holding Company Act of 1956 
B) the Bank Merger Act of 1960 
C) the Change in Bank Control Act of 1978 
D) all of the above 
A) the Bank Holding Company Act of 1956 
B) the Bank Merger Act of 1960 
C) the Change in Bank Control Act of 1978 
D) all of the above

Question 19

The effect of an increase of required reserves by the Fed is:

Accepted Answer

A) a decrease in loanable funds of depository institutions 
B) a decrease in interest rates 
C) usually an increase in vault cash 
D) to stimulate activity in the home construction field 
A) a decrease in loanable funds of depository institutions 
B) a decrease in interest rates 
C) usually an increase in vault cash 
D) to stimulate activity in the home construction field

Question 20

The only bank asset that can be counted as reserve is deposits with the Reserve Banks.

Accepted Answer

A) True 
 B)False

The money supply can be contracted by holding the amount of reserves constant but raising the reserve requirement.

The Federal Open Market Committee:

Which of the following is not a method by which the Federal Reserve establishes monetary policy?

Because of the National Banking Act,the volume of national bank notes depends on the government bond market rather than the seasonal or cyclical needs of the nation for currency.

All commercial banks are members of the Fed.

The Board of Governors publishes ________________,which carries articles of current interest and offers a convenient source of the statistics compiled by the Fed.

Although it enjoys substantial independence in its operations,the appointive power of the president and the ability of Congress to alter its structure make the ______________ a dependent political structure and one of the most powerful monetary organizations in the world.

The Consumer Credit Protection Act requires that lenders clearly explain consumer credit costs and prohibited them from charging overly high-priced credit transactions.

Open market operations are similar to discount operations in that they increase or decrease bank reserves at the initiative of the Fed.

The principal examining activity of the Federal Reserve System is directed to:

A central bank does not:

The National Banking Act provides that national banks can issue their own notes only against U.S.government bonds that the banks held on deposit with large city banks.

All Federal Reserve Banks have:

Federal Reserve actions that stimulate or repress the level of prices or economic activity are called defensive activities.

The Board of Governors of the Federal Reserve System:

Which of the following statements would be false? The discount rate is

The Board of Governors of the Federal Reserve establishes monetary policy by:

The Fed has legal responsibility for administering:

The effect of an increase of required reserves by the Fed is:

The only bank asset that can be counted as reserve is deposits with the Reserve Banks.

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters

Exam 4: Federal Reserve System

The money supply can be contracted by holding the amount of reserves constant but raising the reserve requirement.

The Federal Open Market Committee:

Which of the following is not a method by which the Federal Reserve establishes monetary policy?

Because of the National Banking Act,the volume of national bank notes depends on the government bond market rather than the seasonal or cyclical needs of the nation for currency.

All commercial banks are members of the Fed.

The Board of Governors publishes ________________,which carries articles of current interest and offers a convenient source of the statistics compiled by the Fed.

Although it enjoys substantial independence in its operations,the appointive power of the president and the ability of Congress to alter its structure make the ______________ a dependent political structure and one of the most powerful monetary organizations in the world.

The Consumer Credit Protection Act requires that lenders clearly explain consumer credit costs and prohibited them from charging overly high-priced credit transactions.

Open market operations are similar to discount operations in that they increase or decrease bank reserves at the initiative of the Fed.

The principal examining activity of the Federal Reserve System is directed to:

A central bank does not:

The National Banking Act provides that national banks can issue their own notes only against U.S.government bonds that the banks held on deposit with large city banks.

All Federal Reserve Banks have:

Federal Reserve actions that stimulate or repress the level of prices or economic activity are called defensive activities.

The Board of Governors of the Federal Reserve System:

Which of the following statements would be false? The discount rate is

The Board of Governors of the Federal Reserve establishes monetary policy by:

The Fed has legal responsibility for administering:

The effect of an increase of required reserves by the Fed is:

The only bank asset that can be counted as reserve is deposits with the Reserve Banks.

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Time Value of Money

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters