Question 1

What are the primary arguments for and against the independence of the Fed?

Accepted Answer

The main argument for the Fed's independence is that monetary policy is too important and technical to be determined by politicians. Complete control of the Fed by elected officials increases the likelihood of political business cycle fluctuations in the money supply. Those who oppose the independence of the Fed claim that in a democracy, elected officials should make public policy. critics of Fed independence argue that placing the central bank under the control of elected officials could confer benefits by coordinating and integrating monetary policy with government taxing and spending policies.

Question 2

Which of the following is NOT a responsibility of the Board of Governors?

Accepted Answer

A) approving bank mergers 
B) determining permissible activities for bank holding companies 
C) carrying out open market operations 
D) setting the salaries of the presidents and officers of district banks 
A) approving bank mergers 
B) determining permissible activities for bank holding companies 
C) carrying out open market operations 
D) setting the salaries of the presidents and officers of district banks C

Question 3

The members of Federal Reserve district bank boards of directors who are leaders in industry, commerce, and agriculture are known as

Accepted Answer

A) Class A directors. 
B) Class B directors. 
C) Class C directors. 
D) Class D directors. 
A) Class A directors. 
B) Class B directors. 
C) Class C directors. 
D) Class D directors. B

Question 4

The main argument against Fed independence is that

Accepted Answer

A) in a democracy elected officials should make public policy. 
B) monetary and fiscal policy would be easier to coordinate if the Fed were not independent. 
C) the Fed has proven irresponsible on many occasions. 
D) congressional control was tried during the 1960s and it worked well. 
A) in a democracy elected officials should make public policy. 
B) monetary and fiscal policy would be easier to coordinate if the Fed were not independent. 
C) the Fed has proven irresponsible on many occasions. 
D) congressional control was tried during the 1960s and it worked well.

Question 5

The public interest view of Fed motivation holds that the Fed acts in the interest of

Accepted Answer

A) the general public. 
B) banks. 
C) Congress. 
D) itself. 
A) the general public. 
B) banks. 
C) Congress. 
D) itself.

Question 6

Most of the Fed's earnings come from

Accepted Answer

A) fees charged to financial institutions for check clearing. 
B) interest on the securities it holds. 
C) interest on discount loans. 
D) congressional appropriations. 
A) fees charged to financial institutions for check clearing. 
B) interest on the securities it holds. 
C) interest on discount loans. 
D) congressional appropriations.

Question 7

The facts show that the political business cycle theory

Accepted Answer

A) does a good job of explaining monetary policy during presidential election years. 
B) is unable to explain monetary policy during presidential election years. 
C) doesn't generally support the political business cycle theory. 
D) explains monetary policy best during years in which the President is running for reelection. 
A) does a good job of explaining monetary policy during presidential election years. 
B) is unable to explain monetary policy during presidential election years. 
C) doesn't generally support the political business cycle theory. 
D) explains monetary policy best during years in which the President is running for reelection.

Question 8

What is the primary objective of the Financial Stability Oversight Council?

Accepted Answer

The objective of the council i

Question 9

What is the main reason the Fed operates in a political arena?

Accepted Answer

A) It lacks a constitutional mandate. 
B) The members of the Board of Governors must run for reelection every fourteen years. 
C) The members of the Board of Governors are typically prominent politicians. 
D) It is under the direct control of Congress. 
A) It lacks a constitutional mandate. 
B) The members of the Board of Governors must run for reelection every fourteen years. 
C) The members of the Board of Governors are typically prominent politicians. 
D) It is under the direct control of Congress.

Question 10

Which of the following cities contains a Federal Reserve bank?

Accepted Answer

A) Pittsburgh 
B) Los Angeles 
C) Seattle 
D) Dallas 
A) Pittsburgh 
B) Los Angeles 
C) Seattle 
D) Dallas

Question 11

The Bank of the United States faced opposition from which of the following?

Accepted Answer

A) local banks who resented the Bank's supervision 
B) advocates of limited government who distrusted its power 
C) farmers and small businesses who resented the Bank's interference with their ability to obtain loans 
D) all of the above 
A) local banks who resented the Bank's supervision 
B) advocates of limited government who distrusted its power 
C) farmers and small businesses who resented the Bank's interference with their ability to obtain loans 
D) all of the above

Question 12

The original intent of the Federal Reserve Act of 1913 was to provide the Fed with what role?

Accepted Answer

A) regulator of the banking system 
B) lender of last resort 
C) manage the exchange rate 
D) maintain a balanced budget 
A) regulator of the banking system 
B) lender of last resort 
C) manage the exchange rate 
D) maintain a balanced budget

Question 13

Which of the following statements about the Depository Institutions Deregulation and Monetary Control Act of 1980 is NOT correct?

Accepted Answer

A) It required all banks to maintain reserve deposits with the Fed. 
B) It gave member and nonmember banks equivalent access to discount loans. 
C) It halted the decline in Fed membership. 
D) It eliminated restrictions on interstate banking for member banks. 
A) It required all banks to maintain reserve deposits with the Fed. 
B) It gave member and nonmember banks equivalent access to discount loans. 
C) It halted the decline in Fed membership. 
D) It eliminated restrictions on interstate banking for member banks.

Question 14

The Banking Acts of 1933 and 1935

Accepted Answer

A) established the Federal Reserve System. 
B) increased central control of the Federal Reserve System. 
C) eliminated the authority of the Board of Governors to set reserve requirements. 
D) made the Secretary of the Treasury a member of the Board of Governors. 
A) established the Federal Reserve System. 
B) increased central control of the Federal Reserve System. 
C) eliminated the authority of the Board of Governors to set reserve requirements. 
D) made the Secretary of the Treasury a member of the Board of Governors.

Question 15

The Dodd-Frank Act removed which group from decisions regarding the presidents of Federal Reserve Banks?

Accepted Answer

A) Class A directors 
B) Class B directors 
C) Class C directors 
D) Board of Governors 
A) Class A directors 
B) Class B directors 
C) Class C directors 
D) Board of Governors

Question 16

What was the dilemma that faced the European Central Bank in response to the sovereign debt crisis of 2010?

Accepted Answer

It could intervene to buy some of the de

Question 17

Which of the following statements is correct?

Accepted Answer

A) The Fed has difficulty covering its normal expenses, but is reluctant to ask Congress for money. 
B) The Fed is dependent on the annual appropriations it receives from Congress. 
C) The Fed's profits are substantial, even when compared to the largest U.S. corporations. 
D) At one time the Fed made substantial profits, but falling interest rates have greatly reduced them. 
A) The Fed has difficulty covering its normal expenses, but is reluctant to ask Congress for money. 
B) The Fed is dependent on the annual appropriations it receives from Congress. 
C) The Fed's profits are substantial, even when compared to the largest U.S. corporations. 
D) At one time the Fed made substantial profits, but falling interest rates have greatly reduced them.

Question 18

When did the Federal Reserve Act become law?

Accepted Answer

A) 1836 
B) 1913 
C) 1936 
D) 1951 
A) 1836 
B) 1913 
C) 1936 
D) 1951

Question 19

The members of Federal Reserve district bank boards of directors who represent the public interest are known as

Accepted Answer

A) Class A directors. 
B) Class B directors. 
C) Class C directors. 
D) Class D directors. 
A) Class A directors. 
B) Class B directors. 
C) Class C directors. 
D) Class D directors.

Question 20

In 2012, the House of Representatives voted to have what type of audit of the Fed?

Accepted Answer

A) auditing of financial statements 
B) auditing lending policy that took place during the financial crisis of 2007-2009 
C) auditing of monetary policy decisions 
D) auditing of personal finances of members of the Board of Governors 
A) auditing of financial statements 
B) auditing lending policy that took place during the financial crisis of 2007-2009 
C) auditing of monetary policy decisions 
D) auditing of personal finances of members of the Board of Governors

What are the primary arguments for and against the independence of the Fed?

Which of the following is NOT a responsibility of the Board of Governors?

The members of Federal Reserve district bank boards of directors who are leaders in industry, commerce, and agriculture are known as

The main argument against Fed independence is that

The public interest view of Fed motivation holds that the Fed acts in the interest of

Most of the Fed's earnings come from

The facts show that the political business cycle theory

What is the primary objective of the Financial Stability Oversight Council?

What is the main reason the Fed operates in a political arena?

Which of the following cities contains a Federal Reserve bank?

The Bank of the United States faced opposition from which of the following?

The original intent of the Federal Reserve Act of 1913 was to provide the Fed with what role?

Which of the following statements about the Depository Institutions Deregulation and Monetary Control Act of 1980 is NOT correct?

The Banking Acts of 1933 and 1935

The Dodd-Frank Act removed which group from decisions regarding the presidents of Federal Reserve Banks?

What was the dilemma that faced the European Central Bank in response to the sovereign debt crisis of 2010?

Which of the following statements is correct?

When did the Federal Reserve Act become law?

The members of Federal Reserve district bank boards of directors who represent the public interest are known as

In 2012, the House of Representatives voted to have what type of audit of the Fed?

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, Information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, Asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Investment Banks, Mutual Funds, Hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I: The Aggregate Demand and Aggregate Supply Model

Monetary Theory II: The IS-MP Model

Filters

Exam 13: The Federal Reserve and Central Banking

What are the primary arguments for and against the independence of the Fed?

Which of the following is NOT a responsibility of the Board of Governors?

The members of Federal Reserve district bank boards of directors who are leaders in industry, commerce, and agriculture are known as

The main argument against Fed independence is that

The public interest view of Fed motivation holds that the Fed acts in the interest of

Most of the Fed's earnings come from

The facts show that the political business cycle theory

What is the primary objective of the Financial Stability Oversight Council?

What is the main reason the Fed operates in a political arena?

Which of the following cities contains a Federal Reserve bank?

The Bank of the United States faced opposition from which of the following?

The original intent of the Federal Reserve Act of 1913 was to provide the Fed with what role?

Which of the following statements about the Depository Institutions Deregulation and Monetary Control Act of 1980 is NOT correct?

The Banking Acts of 1933 and 1935

The Dodd-Frank Act removed which group from decisions regarding the presidents of Federal Reserve Banks?

What was the dilemma that faced the European Central Bank in response to the sovereign debt crisis of 2010?

Which of the following statements is correct?

When did the Federal Reserve Act become law?

The members of Federal Reserve district bank boards of directors who represent the public interest are known as

In 2012, the House of Representatives voted to have what type of audit of the Fed?

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, Information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, Asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Investment Banks, Mutual Funds, Hedge Funds, and the Shadow Banking System

Financial Crises and Financial Regulation

The Federal Reserves Balance Sheet and the Money Supply Process

Monetary Policy

The International Financial System and Monetary Policy

Monetary Theory I: The Aggregate Demand and Aggregate Supply Model

Monetary Theory II: The IS-MP Model

Filters