Question 1

Discuss similarities and differences between Ben Bernanke and Alan Greenspan in their respective roles as chairman of the Federal Reserve Board.

Accepted Answer

Similarities

Ben Bernanke, even before

Question 2

The designers of the Federal Reserve Act meant to create a central bank characterized by its

Accepted Answer

A)  system of checks and balances and decentralization of power. 
B)  strong concentration of power in the hands of a few people. 
C)  inability to function as a lender of last resort. 
D)  responsiveness to the electorate. 
A)  system of checks and balances and decentralization of power. 
B)  strong concentration of power in the hands of a few people. 
C)  inability to function as a lender of last resort. 
D)  responsiveness to the electorate.

Question 3

Federal Reserve independence is thought to

Accepted Answer

A)  introduce a short-term bias to monetary policymaking. 
B)  lead to better fiscal and monetary policy coordination. 
C)  introduce longer-run considerations to monetary policymaking. 
D)  do both A and B of the above. 
A)  introduce a short-term bias to monetary policymaking. 
B)  lead to better fiscal and monetary policy coordination. 
C)  introduce longer-run considerations to monetary policymaking. 
D)  do both A and B of the above.

Question 4

The oldest central bank,founded in 1694,is the

Accepted Answer

A)  Bank of England. 
B)  Deutsche Bundesbank. 
C)  Bank of Japan. 
D)  Federal Reserve System. 
A)  Bank of England. 
B)  Deutsche Bundesbank. 
C)  Bank of Japan. 
D)  Federal Reserve System.

Question 5

Members of Congress are able to influence monetary policy,albeit indirectly,through their ability to

Accepted Answer

A)  withhold appropriations from the Board of Governors. 
B)  withhold appropriations from the Federal Open Market Committee. 
C)  propose legislation that would force the Fed to submit budget requests to Congress, as must other government agencies. 
D)  do all of the above. 
A)  withhold appropriations from the Board of Governors. 
B)  withhold appropriations from the Federal Open Market Committee. 
C)  propose legislation that would force the Fed to submit budget requests to Congress, as must other government agencies. 
D)  do all of the above.

Question 6

According to the textbook authors,

Accepted Answer

A)  the Fed appears to be remarkably free of the political pressures that influence other government agencies. 
B)  since the president can protect the Fed from Congress, the Fed may be responsive to the president's policy preferences. 
C)  the Fed appears to be more responsive to the political pressures that influence other government agencies. 
D)  both A and B of the above. 
E)  both B and C of the above. 
A)  the Fed appears to be remarkably free of the political pressures that influence other government agencies. 
B)  since the president can protect the Fed from Congress, the Fed may be responsive to the president's policy preferences. 
C)  the Fed appears to be more responsive to the political pressures that influence other government agencies. 
D)  both A and B of the above. 
E)  both B and C of the above.

Question 7

The case for Federal Reserve independence does not include the idea that

Accepted Answer

A)  political pressure would impart an inflationary bias to monetary policy. 
B)  a politically insulated Fed would be more concerned with long-run objectives and thus be a defender of a sound dollar and a stable price level. 
C)  policy is always performed better by an elite group such as the Fed. 
D)  a Federal Reserve under the control of Congress or the president might make the so-called political business cycle more pronounced. 
A)  political pressure would impart an inflationary bias to monetary policy. 
B)  a politically insulated Fed would be more concerned with long-run objectives and thus be a defender of a sound dollar and a stable price level. 
C)  policy is always performed better by an elite group such as the Fed. 
D)  a Federal Reserve under the control of Congress or the president might make the so-called political business cycle more pronounced.

Question 8

In recent years,has Fed policymaking become more or less transparent? Why?

Accepted Answer

Fed should be more transparent as it is

Question 9

Advocates of Fed independence fear that subjecting the Fed to direct presidential or congressional control would

Accepted Answer

A)  impart an inflationary bias to monetary policy. 
B)  force monetary authorities to sacrifice the long-run objective of price stability. 
C)  make the so-called political business cycle even more pronounced. 
D)  do all of the above. 
E)  do only A and B of the above. 
A)  impart an inflationary bias to monetary policy. 
B)  force monetary authorities to sacrifice the long-run objective of price stability. 
C)  make the so-called political business cycle even more pronounced. 
D)  do all of the above. 
E)  do only A and B of the above.

Question 10

All ________ are required to be members of the Fed.

Accepted Answer

A)  state-chartered banks 
B)  nationally chartered banks 
C)  banks with more than $100 million in assets 
D)  banks with more than $500 million in assets 
A)  state-chartered banks 
B)  nationally chartered banks 
C)  banks with more than $100 million in assets 
D)  banks with more than $500 million in assets

Question 11

Describe the structure and responsibility for policy tools in The Federal Reserve System.

Accepted Answer

The answer of Describe the structure and responsibility for policy...

Question 12

The theory of bureaucratic behavior when applied to the Fed helps to explain why the Fed

Accepted Answer

A)  is supportive of congressional attempts to limit the central bank's autonomy. 
B)  is secretive about the conduct of future monetary policy. 
C)  sought less control over banks in the 1980s. 
D)  is willing to take on powerful groups that may threaten its autonomy. 
A)  is supportive of congressional attempts to limit the central bank's autonomy. 
B)  is secretive about the conduct of future monetary policy. 
C)  sought less control over banks in the 1980s. 
D)  is willing to take on powerful groups that may threaten its autonomy.

Question 13

The theory of bureaucratic behavior suggests that the Federal Reserve will

Accepted Answer

A)  try to avoid a conflict with the president and Congress over increases in interest rates. 
B)  try to gain regulatory power over more banks. 
C)  devise clever strategies in an effort to avoid blame for poor economic performance. 
D)  do all of the above. 
A)  try to avoid a conflict with the president and Congress over increases in interest rates. 
B)  try to gain regulatory power over more banks. 
C)  devise clever strategies in an effort to avoid blame for poor economic performance. 
D)  do all of the above.

Question 14

Member commercial banks have purchased stock in their district Fed banks; the dividend paid by that stock is limited to

Accepted Answer

A)  four percent annually. 
B)  five percent annually. 
C)  six percent annually. 
D)  eight percent annually. 
A)  four percent annually. 
B)  five percent annually. 
C)  six percent annually. 
D)  eight percent annually.

Question 15

Although it enjoys a high degree of autonomy,the Fed is still subject to the influence of Congress because

Accepted Answer

A)  Congress can pass legislation that would restrict the Fed's independence. 
B)  Congress can withhold the Fed's budget requests. 
C)  Congress can remove members of the Board of Governors whose views on policy differ from those of key members of Congress. 
D)  All of the above. 
A)  Congress can pass legislation that would restrict the Fed's independence. 
B)  Congress can withhold the Fed's budget requests. 
C)  Congress can remove members of the Board of Governors whose views on policy differ from those of key members of Congress. 
D)  All of the above.

Question 16

Former Board of Governors chairman Paul Volcker reportedly once said that the Federal Reserve is free to pursue any policy it desires,as long as it convinces Congress that such a policy is reasonable.What does Volcker's comment suggest about the independence of the Fed? Explain.

Accepted Answer

The comment suggests that the Fed is not

Question 17

A trend in recent years is that more and more governments

Accepted Answer

A)  have been granting greater independence to their central banks. 
B)  have been reducing the independence of their central banks to make them more accountable for poor economic performance. 
C)  have mandated that their central banks give up multiple policy goals to focus strictly on inflation. 
D)  have required their central banks to coordinate policies with their ministers of finance. 
A)  have been granting greater independence to their central banks. 
B)  have been reducing the independence of their central banks to make them more accountable for poor economic performance. 
C)  have mandated that their central banks give up multiple policy goals to focus strictly on inflation. 
D)  have required their central banks to coordinate policies with their ministers of finance.

Question 18

Critics of the current system of Fed independence contend that the president has too much control over monetary policy on a day-to-day basis.

Accepted Answer

A) True 
 B)False

Question 19

What are the factors that promote the independence of the Federal Reserve?

Accepted Answer

Federal Reserve, the central bank of USA

Question 20

Which of the following are true statements?

Accepted Answer

A)  The FOMC usually meets every six weeks to set monetary policy. 
B)  The FOMC issues directives to the trading desk at the New York Fed. 
C)  Designers of the Federal Reserve Act did not envision the use of discount lending as a monetary policy tool. 
D)  All of the above are true statements. 
E)  Only A and B of the above are true statements. 
A)  The FOMC usually meets every six weeks to set monetary policy. 
B)  The FOMC issues directives to the trading desk at the New York Fed. 
C)  Designers of the Federal Reserve Act did not envision the use of discount lending as a monetary policy tool. 
D)  All of the above are true statements. 
E)  Only A and B of the above are true statements.

Exam 9: Central Banks and the Federal Reserve System

Discuss similarities and differences between Ben Bernanke and Alan Greenspan in their respective roles as chairman of the Federal Reserve Board.

The designers of the Federal Reserve Act meant to create a central bank characterized by its

Federal Reserve independence is thought to

The oldest central bank,founded in 1694,is the

Members of Congress are able to influence monetary policy,albeit indirectly,through their ability to

According to the textbook authors,

The case for Federal Reserve independence does not include the idea that

In recent years,has Fed policymaking become more or less transparent? Why?

Advocates of Fed independence fear that subjecting the Fed to direct presidential or congressional control would

All ________ are required to be members of the Fed.

Describe the structure and responsibility for policy tools in The Federal Reserve System.

The theory of bureaucratic behavior when applied to the Fed helps to explain why the Fed

The theory of bureaucratic behavior suggests that the Federal Reserve will

Member commercial banks have purchased stock in their district Fed banks; the dividend paid by that stock is limited to

Although it enjoys a high degree of autonomy,the Fed is still subject to the influence of Congress because

Former Board of Governors chairman Paul Volcker reportedly once said that the Federal Reserve is free to pursue any policy it desires,as long as it convinces Congress that such a policy is reasonable.What does Volcker's comment suggest about the independence of the Fed? Explain.

A trend in recent years is that more and more governments

Critics of the current system of Fed independence contend that the president has too much control over monetary policy on a day-to-day basis.

What are the factors that promote the independence of the Federal Reserve?

Which of the following are true statements?

Why Study Financial Markets and Institutions?

Overview of the Financial System

What Do Interest Rates Mean and What Is Their Role in Valuation?

Why Do Interest Rates Change?

How Do Risk and Term Structure Affect Interest Rates?

Are Financial Markets Efficient?

Why Do Financial Institutions Exist?

Why Do Financial Crises Occur and

Conduct of Monetary Policy: Tools, Goals, Strategy, and Tactics

The Money Markets

The Bond Market

The Stock Market

The Mortgage Markets

The Foreign Exchange Market

The International Financial System

Banking and the Management of Financial Institutions

Financial Regulation

Banking Industry: Structure and Competition

The Mutual Fund Industry

Insurance Companies and Pension Funds

Investment Banks, Security Brokers and Dealers, and Venture Capital Firms

Risk Management in Financial Institutions

Hedging with Financial Derivatives

Financial Crises In Emerging Market Economies

Savings Associations and Credit Unions

Finance Companies

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