Question 1

Which of the following officially ended the cooperation between the Treasury and the Fed that had taken place during World War 2?

Accepted Answer

A) Truman doctrine 
B) Federal Reserve Act of 1951 
C) Dodd-Frank Act 
D) Treasury-Federal Reserve Accord 
A) Truman doctrine 
B) Federal Reserve Act of 1951 
C) Dodd-Frank Act 
D) Treasury-Federal Reserve Accord

Question 2

The National Monetary Commission

Accepted Answer

A) was created by Congress to study the setting up of a central bank. 
B) authorizes open market operations. 
C) oversees nationally chartered banks. 
D) chooses Federal Reserve district bank presidents. 
A) was created by Congress to study the setting up of a central bank. 
B) authorizes open market operations. 
C) oversees nationally chartered banks. 
D) chooses Federal Reserve district bank presidents.

Question 3

To conduct open market operations, the FOMC issues a directive to

Accepted Answer

A) the trading desk at the Federal Reserve Bank of New York. 
B) the Board of Governors in Washington, D.C. 
C) the presidents of the district banks. 
D) the chairman of the New York Stock Exchange. 
A) the trading desk at the Federal Reserve Bank of New York. 
B) the Board of Governors in Washington, D.C. 
C) the presidents of the district banks. 
D) the chairman of the New York Stock Exchange.

Question 4

The principal-agent view of Fed motivation predicts that the Fed acts

Accepted Answer

A) to promote the interests of the general public. 
B) to promote the interests of the Fed's principal-the President of the United States. 
C) in order to increase its power, influence, and prestige. 
D) in order to make sure its agents-commercial banks-carry out its wishes. 
A) to promote the interests of the general public. 
B) to promote the interests of the Fed's principal-the President of the United States. 
C) in order to increase its power, influence, and prestige. 
D) in order to make sure its agents-commercial banks-carry out its wishes.

Question 5

Which of the following statements is correct?

Accepted Answer

A) The Fed is fully insulated from external pressures due to the long terms that members of the Board of Governors serve. 
B) The Fed is fully insulated from external pressures because it does not need to go through the normal congressional appropriations process. 
C) The Fed is fully insulated from external pressures because it has a constitutional mandate. 
D) The Fed is only partially insulated from external pressures. 
A) The Fed is fully insulated from external pressures due to the long terms that members of the Board of Governors serve. 
B) The Fed is fully insulated from external pressures because it does not need to go through the normal congressional appropriations process. 
C) The Fed is fully insulated from external pressures because it has a constitutional mandate. 
D) The Fed is only partially insulated from external pressures.

Question 6

The main argument in favor of Fed independence is that

Accepted Answer

A) interest rates would probably be lower if Congress controlled the Fed; thus hurting savers. 
B) the Constitution requires it. 
C) monetary policy is too important and too technical to be determined in the political arena. 
D) congressional control of the Fed was tried during the 1960s and did not work well. 
A) interest rates would probably be lower if Congress controlled the Fed; thus hurting savers. 
B) the Constitution requires it. 
C) monetary policy is too important and too technical to be determined in the political arena. 
D) congressional control of the Fed was tried during the 1960s and did not work well.

Question 7

During World War II

Accepted Answer

A) the Board of Governors was temporarily disbanded. 
B) the Fed was not allowed to make discount loans. 
C) the Fed agreed to hold interest rates on short-term Treasury securities at low levels. 
D) the Fed agreed not to buy Treasury securities. 
A) the Board of Governors was temporarily disbanded. 
B) the Fed was not allowed to make discount loans. 
C) the Fed agreed to hold interest rates on short-term Treasury securities at low levels. 
D) the Fed agreed not to buy Treasury securities.

Question 8

Which central bank gained the power to set interest rates independent of the government in the late 1990s?

Accepted Answer

A) Bank of England 
B) Bank of Canada 
C) Bank of China 
D) Federal Reserve Board 
A) Bank of England 
B) Bank of Canada 
C) Bank of China 
D) Federal Reserve Board

Question 9

Which of the following countries had an unemployment rate in excess of 20% as of late 2012?

Accepted Answer

A) Ireland 
B) Spain 
C) Portugal 
D) Italy 
A) Ireland 
B) Spain 
C) Portugal 
D) Italy

Question 10

The political business cycle theory predicts that

Accepted Answer

A) the Fed acts to promote the interests of the general public. 
B) the Fed acts to stimulate economic activity before an election. 
C) the President's appointments to the Board of Governors will usually be politicians. 
D) political factors over which the Fed has no control are most important in explaining the business cycle. 
A) the Fed acts to promote the interests of the general public. 
B) the Fed acts to stimulate economic activity before an election. 
C) the President's appointments to the Board of Governors will usually be politicians. 
D) political factors over which the Fed has no control are most important in explaining the business cycle.

Question 11

What was the original intent of the Federal Reserve Act of 1913?

Accepted Answer

The original intent was to cre

Question 12

What are the limitations to the Fed's independence?

Accepted Answer

First, the president can exercise contro

Question 13

Assuming a required reserve ratio of 8%, interest rate on reserves of 0.5%, and interest rate on loans of 4%, what is the effective cost of the reserve requirement on a $1000 deposit?

Accepted Answer

A) 0)05% 
B) 0)28% 
C) 0)32% 
D) 4% 
A) 0)05% 
B) 0)28% 
C) 0)32% 
D) 4%

Question 14

In what ways is the Fed independent of the political process?

Accepted Answer

Board members are appointed for long, no

Question 15

How many Federal Reserve districts are there?

Accepted Answer

A) 1 
B) 2 
C) 12 
D) 50 
A) 1 
B) 2 
C) 12 
D) 50

Question 16

Which of the following is NOT a way in which power was divided up in the Federal Reserve System?

Accepted Answer

A) between bankers and business interests 
B) among states and regions 
C) between importers and exporters 
D) between government and the private sector 
A) between bankers and business interests 
B) among states and regions 
C) between importers and exporters 
D) between government and the private sector

Question 17

The Fed does not have to go through the normal congressional appropriations process because

Accepted Answer

A) its expenses are very small. 
B) it was given enough funds at the time of its founding to provide for its expenses indefinitely. 
C) it is self financing. 
D) it is not part of the legislative branch of the federal government. 
A) its expenses are very small. 
B) it was given enough funds at the time of its founding to provide for its expenses indefinitely. 
C) it is self financing. 
D) it is not part of the legislative branch of the federal government.

Question 18

Which of the following does not serve on the Governing Council of the European Central Bank?

Accepted Answer

A) governors of the national central banks 
B) members of the executive board 
C) finance ministers of each country 
D) chair of the executive board 
A) governors of the national central banks 
B) members of the executive board 
C) finance ministers of each country 
D) chair of the executive board

Question 19

What percentage of all banks in the United States belong to the Federal Reserve System?

Accepted Answer

A) 5% 
B) 38% 
C) 75% 
D) 90% 
A) 5% 
B) 38% 
C) 75% 
D) 90%

Question 20

Who serves as voting members of the Federal Open Market Committee (FOMC)?

Accepted Answer

Voting members of the FOMC inc

Which of the following officially ended the cooperation between the Treasury and the Fed that had taken place during World War 2?

The National Monetary Commission

To conduct open market operations, the FOMC issues a directive to

The principal-agent view of Fed motivation predicts that the Fed acts

Which of the following statements is correct?

The main argument in favor of Fed independence is that

During World War II

Which central bank gained the power to set interest rates independent of the government in the late 1990s?

Which of the following countries had an unemployment rate in excess of 20% as of late 2012?

The political business cycle theory predicts that

What was the original intent of the Federal Reserve Act of 1913?

What are the limitations to the Fed's independence?

Assuming a required reserve ratio of 8%, interest rate on reserves of 0.5%, and interest rate on loans of 4%, what is the effective cost of the reserve requirement on a $1000 deposit?

In what ways is the Fed independent of the political process?

How many Federal Reserve districts are there?

Which of the following is NOT a way in which power was divided up in the Federal Reserve System?

The Fed does not have to go through the normal congressional appropriations process because

Which of the following does not serve on the Governing Council of the European Central Bank?

What percentage of all banks in the United States belong to the Federal Reserve System?

Who serves as voting members of the Federal Open Market Committee (FOMC)?

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

Which of the following officially ended the cooperation between the Treasury and the Fed that had taken place during World War 2?

The National Monetary Commission

To conduct open market operations, the FOMC issues a directive to

The principal-agent view of Fed motivation predicts that the Fed acts

Which of the following statements is correct?

The main argument in favor of Fed independence is that

During World War II

Which central bank gained the power to set interest rates independent of the government in the late 1990s?

Which of the following countries had an unemployment rate in excess of 20% as of late 2012?

The political business cycle theory predicts that

What was the original intent of the Federal Reserve Act of 1913?

What are the limitations to the Fed's independence?

Assuming a required reserve ratio of 8%, interest rate on reserves of 0.5%, and interest rate on loans of 4%, what is the effective cost of the reserve requirement on a $1000 deposit?

In what ways is the Fed independent of the political process?

How many Federal Reserve districts are there?

Which of the following is NOT a way in which power was divided up in the Federal Reserve System?

The Fed does not have to go through the normal congressional appropriations process because

Which of the following does not serve on the Governing Council of the European Central Bank?

What percentage of all banks in the United States belong to the Federal Reserve System?

Who serves as voting members of the Federal Open Market Committee (FOMC)?

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