Question 1

Why might Congress benefit from the Fed being self-financed?

Accepted Answer

A) Self-financing increases Congressional control over the Fed. 
B) Self-financing reduces the Fed's exposure to external pressures. 
C) Self-financing gives the Fed an incentive to expand the money supply, which ultimately results in Congress having additional funds to spend. 
D) Congress does not benefit from the Fed being self-financed; Congress is obliged by the Constitution to allow the Fed to be self-financed. 
A) Self-financing increases Congressional control over the Fed. 
B) Self-financing reduces the Fed's exposure to external pressures. 
C) Self-financing gives the Fed an incentive to expand the money supply, which ultimately results in Congress having additional funds to spend. 
D) Congress does not benefit from the Fed being self-financed; Congress is obliged by the Constitution to allow the Fed to be self-financed.

Question 2

Who are the members of the Financial Stability Oversight Council?

Accepted Answer

Members of the Financial Stabi

Question 3

Which of the following statements regarding member banks is true?

Accepted Answer

A) A majority of banks are part of the Federal Reserve System as well as a majority of bank deposits. 
B) A minority of banks are part of the Federal Reserve System, but they have a majority of deposits. 
C) A majority of banks are part of the Federal Reserve System, but they have a minority of deposits. 
D) A minority of banks are part of the Federal Reserve System as well as a minority of deposits 
A) A majority of banks are part of the Federal Reserve System as well as a majority of bank deposits. 
B) A minority of banks are part of the Federal Reserve System, but they have a majority of deposits. 
C) A majority of banks are part of the Federal Reserve System, but they have a minority of deposits. 
D) A minority of banks are part of the Federal Reserve System as well as a minority of deposits

Question 4

In January 2010, President Obama appointed which of the following to be chair of the Federal Reserve?

Accepted Answer

A) Greenspan 
B) Bernanke 
C) Geithner 
D) Trichet 
A) Greenspan 
B) Bernanke 
C) Geithner 
D) Trichet

Question 5

Members of the Board of Governors are

Accepted Answer

A) elected by the district bank presidents. 
B) appointed by the President of the United States, subject to confirmation by the Senate. 
C) appointed by the National Monetary Commission. 
D) appointed by the Securities and Exchange Commission, subject to congressional veto. 
A) elected by the district bank presidents. 
B) appointed by the President of the United States, subject to confirmation by the Senate. 
C) appointed by the National Monetary Commission. 
D) appointed by the Securities and Exchange Commission, subject to congressional veto.

Question 6

Members of the Board of Governors

Accepted Answer

A) must resign when the President who has appointed them leaves office. 
B) may serve no more than three consecutive four-year terms. 
C) serve for life or good behavior. 
D) serve one nonrenewable fourteen-year term. 
A) must resign when the President who has appointed them leaves office. 
B) may serve no more than three consecutive four-year terms. 
C) serve for life or good behavior. 
D) serve one nonrenewable fourteen-year term.

Question 7

What constitutes meaningful independence of a central bank?

Accepted Answer

The central bank must be able

Question 8

How do individual become members of the Board of Governors?

Accepted Answer

They are appointed b

Question 9

The president of which Federal Reserve bank is always a voting member of the Federal Open Market Committee?

Accepted Answer

A) Philadelphia 
B) Boston 
C) Chicago 
D) New York 
A) Philadelphia 
B) Boston 
C) Chicago 
D) New York

Question 10

In 2010, doubts were raised about the debt of all of the following countries EXCEPT

Accepted Answer

A) Ireland. 
B) Greece. 
C) Poland. 
D) Portugal. 
A) Ireland. 
B) Greece. 
C) Poland. 
D) Portugal.

Question 11

How did the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 affect the Fed's

Accepted Answer

The General Account Office was ordered t

Question 12

Which of the following is NOT an activity carried out by Federal Reserve district banks?

Accepted Answer

A) open market operations 
B) issuing new Federal Reserve Notes 
C) making discount loans 
D) examining state member banks 
A) open market operations 
B) issuing new Federal Reserve Notes 
C) making discount loans 
D) examining state member banks

Question 13

In the early post-war years, the Fed was reluctant to continue its wartime agreement with the Treasury because it believed the result would be

Accepted Answer

A) recession. 
B) inflation. 
C) higher taxes. 
D) lower taxes. 
A) recession. 
B) inflation. 
C) higher taxes. 
D) lower taxes.

Question 14

Which of the following appears to be evidence against the public interest view of the Fed's motivation?

Accepted Answer

A) The conflict with the Treasury over interest rate fixing during World War II. 
B) The failure of the Fed to emphasize the goal of price stability. 
C) The unwillingness of the Fed to turn over its excess profits to the Treasury. 
D) The independence of Fed chairmen from the authority of the President. 
A) The conflict with the Treasury over interest rate fixing during World War II. 
B) The failure of the Fed to emphasize the goal of price stability. 
C) The unwillingness of the Fed to turn over its excess profits to the Treasury. 
D) The independence of Fed chairmen from the authority of the President.

Question 15

Apart from the United States, in countries where central bank board members serve fixed terms of office,

Accepted Answer

A) none have terms as long as fourteen years. 
B) many serve for life or good behavior. 
C) all have terms longer than fourteen years. 
D) the head of the central bank rarely has a term longer than one year. 
A) none have terms as long as fourteen years. 
B) many serve for life or good behavior. 
C) all have terms longer than fourteen years. 
D) the head of the central bank rarely has a term longer than one year.

Question 16

The margin requirement set by the Federal Reserve is the

Accepted Answer

A) proportion of the purchase price of a security that an investor must pay in cash. 
B) difference between the interest rate banks may charge on loans and the interest rate they receive from deposits. 
C) same thing as the required reserve ratio on deposits. 
D) difference banks must maintain between the value of their assets and the value of their liabilities. 
A) proportion of the purchase price of a security that an investor must pay in cash. 
B) difference between the interest rate banks may charge on loans and the interest rate they receive from deposits. 
C) same thing as the required reserve ratio on deposits. 
D) difference banks must maintain between the value of their assets and the value of their liabilities.

Question 17

The members of Federal Reserve district bank boards of directors who are bankers 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 18

Why has the Federal Reserve chairman often been called the second most important person in terms of affecting the economy?

Accepted Answer

A) The Fed chairman has veto power over all federal spending. 
B) The Fed is in control of monetary policy. 
C) The Fed chairman draws the second highest salary of any official of the federal government. 
D) The Fed has regulatory power over all financial markets. 
A) The Fed chairman has veto power over all federal spending. 
B) The Fed is in control of monetary policy. 
C) The Fed chairman draws the second highest salary of any official of the federal government. 
D) The Fed has regulatory power over all financial markets.

Question 19

Assuming a required reserve ratio of 5%, interest rate on reserves of 1%, and interest rate on loans of 6%, what is the effective cost of the reserve requirement on a $10,000 deposit?

Accepted Answer

A) 0)05% 
B) 0)25% 
C) 0)30% 
D) 1% 
A) 0)05% 
B) 0)25% 
C) 0)30% 
D) 1%

Question 20

Which of the following is the most common goal for central banks of industrialized countries?

Accepted Answer

A) high employment 
B) high economic growth 
C) low interest rates 
D) low inflation 
A) high employment 
B) high economic growth 
C) low interest rates 
D) low inflation

Why might Congress benefit from the Fed being self-financed?

Who are the members of the Financial Stability Oversight Council?

Which of the following statements regarding member banks is true?

In January 2010, President Obama appointed which of the following to be chair of the Federal Reserve?

Members of the Board of Governors are

Members of the Board of Governors

What constitutes meaningful independence of a central bank?

How do individual become members of the Board of Governors?

The president of which Federal Reserve bank is always a voting member of the Federal Open Market Committee?

In 2010, doubts were raised about the debt of all of the following countries EXCEPT

How did the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 affect the Fed's

Which of the following is NOT an activity carried out by Federal Reserve district banks?

In the early post-war years, the Fed was reluctant to continue its wartime agreement with the Treasury because it believed the result would be

Which of the following appears to be evidence against the public interest view of the Fed's motivation?

Apart from the United States, in countries where central bank board members serve fixed terms of office,

The margin requirement set by the Federal Reserve is the

The members of Federal Reserve district bank boards of directors who are bankers are known as

Why has the Federal Reserve chairman often been called the second most important person in terms of affecting the economy?

Assuming a required reserve ratio of 5%, interest rate on reserves of 1%, and interest rate on loans of 6%, what is the effective cost of the reserve requirement on a $10,000 deposit?

Which of the following is the most common goal for central banks of industrialized countries?

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

Why might Congress benefit from the Fed being self-financed?

Who are the members of the Financial Stability Oversight Council?

Which of the following statements regarding member banks is true?

In January 2010, President Obama appointed which of the following to be chair of the Federal Reserve?

Members of the Board of Governors are

Members of the Board of Governors

What constitutes meaningful independence of a central bank?

How do individual become members of the Board of Governors?

The president of which Federal Reserve bank is always a voting member of the Federal Open Market Committee?

In 2010, doubts were raised about the debt of all of the following countries EXCEPT

How did the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 affect the Fed's

Which of the following is NOT an activity carried out by Federal Reserve district banks?

In the early post-war years, the Fed was reluctant to continue its wartime agreement with the Treasury because it believed the result would be

Which of the following appears to be evidence against the public interest view of the Fed's motivation?

Apart from the United States, in countries where central bank board members serve fixed terms of office,

The margin requirement set by the Federal Reserve is the

The members of Federal Reserve district bank boards of directors who are bankers are known as

Why has the Federal Reserve chairman often been called the second most important person in terms of affecting the economy?

Assuming a required reserve ratio of 5%, interest rate on reserves of 1%, and interest rate on loans of 6%, what is the effective cost of the reserve requirement on a $10,000 deposit?

Which of the following is the most common goal for central banks of industrialized countries?

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