Question 1

The major asset of the Federal Reserve is

Accepted Answer

A) U.S. Treasury securities. 
B) depository institution reserves. 
C) currency outside banks. 
D) vault cash of commercial banks. 
E) gold and foreign exchange. 
A) U.S. Treasury securities. 
B) depository institution reserves. 
C) currency outside banks. 
D) vault cash of commercial banks. 
E) gold and foreign exchange.

Question 2

What does the 2004 Check 21 Law allow? Why was this Law passed? Does it benefit the customer or banks? Explain.

Accepted Answer

The Check 21 Law authorizes the use of a

Question 3

The Fed funds rate is the rate that

Accepted Answer

A) banks charge for loans to corporate customers. 
B) banks charge to lend foreign exchange to customers. 
C) the Federal Reserve charges on emergency loans to commercial banks. 
D) banks charge each other on loans of excess reserves. 
E) banks charge securities dealers to finance their inventory. 
A) banks charge for loans to corporate customers. 
B) banks charge to lend foreign exchange to customers. 
C) the Federal Reserve charges on emergency loans to commercial banks. 
D) banks charge each other on loans of excess reserves. 
E) banks charge securities dealers to finance their inventory.

Question 4

The major monetary policy-making arm of the Federal Reserve is the

Accepted Answer

A) Board of Governors. 
B) Council of Federal Reserve Bank presidents. 
C) Office of the Comptroller of the Currency. 
D) Federal Reserve Bank of New York. 
E) None of these choices are correct. 
A) Board of Governors. 
B) Council of Federal Reserve Bank presidents. 
C) Office of the Comptroller of the Currency. 
D) Federal Reserve Bank of New York. 
E) None of these choices are correct.

Question 5

The major liability of the Federal Reserve is

Accepted Answer

A) U.S. Treasury securities. 
B) depository institution reserves. 
C) currency outside banks. 
D) vault cash of commercial banks. 
E) gold and foreign exchange. 
A) U.S. Treasury securities. 
B) depository institution reserves. 
C) currency outside banks. 
D) vault cash of commercial banks. 
E) gold and foreign exchange.

Question 6

The monetary base is the amount of coin and currency in circulation plus reserves.

Accepted Answer

A) True 
 B)False

Question 7

During the 2010-2014 period,the Federal Reserve purchased long-term treasury securities as part of the Quantitative Easing program.

Accepted Answer

A) True 
 B)False

Question 8

The 12 Federal Reserve Banks perform what functions?

Accepted Answer

1. Assist in monetary policy. 2. Supervi

Question 9

Federal Reserve interest rate decisions can be vetoed by the U.S. president or the Congress.

Accepted Answer

A) True 
 B)False

Question 10

What are the four major functions of the Federal Reserve System?

Accepted Answer

1. Conducts monetary policy. 2

Question 11

The Fed changes reserve requirements from 10 percent to 14 percent,thereby eliminating $750 million in excess reserves. The total change in deposits (with no drains)would be (rounded)

Accepted Answer

A) $7.917 billion. 
B) $6.630 billion. 
C) $5.357 billion. 
D) $4.934 billion. 
E) None of these choices are correct. 
A) $7.917 billion. 
B) $6.630 billion. 
C) $5.357 billion. 
D) $4.934 billion. 
E) None of these choices are correct.

Question 12

How have recent changes in discount window credit programs affected the use of this tool for monetary policy?

Accepted Answer

In the past,the discount rate was kept b

Question 13

What are the intended consequences from charging an interest on excess reserves by Central banks?

Accepted Answer

A) Banks lend less money. 
B) Interest rates increase. 
C) Banks deposits increase. 
D) Banks lend more money. 
E) All of these choices are correct. 
A) Banks lend less money. 
B) Interest rates increase. 
C) Banks deposits increase. 
D) Banks lend more money. 
E) All of these choices are correct.

Question 14

Explain how the deposit multiplier works.

Accepted Answer

Suppose the Fed increases bank reserves

Question 15

The ________ is a network linking over 9,000 banks with the Federal Reserve that is used to transfer deposits and make loan payments between participants.

Accepted Answer

A) Fedwire 
B) ACH 
C) CHIPS 
D) NASDAQ 
E) SWIFT 
A) Fedwire 
B) ACH 
C) CHIPS 
D) NASDAQ 
E) SWIFT

Question 16

Federal Reserve Board members are appointed by the U.S. president and confirmed by the Senate for a nonrenewable 14-year term.

Accepted Answer

A) True 
 B)False

Question 17

What are the main responsibilities of the FOMC?

Accepted Answer

Promote full employment; promo

Question 18

According to the current FOMC stances,inflation targeting promotes maximum employment.

Accepted Answer

A) True 
 B)False

Question 19

Before 2003 the discount window loan rate was set

Accepted Answer

A) below the target Fed funds rate. 
B) above the target Fed funds rate. 
C) equal to the target Fed funds rate. 
D) equal to the repurchase rate. 
A) below the target Fed funds rate. 
B) above the target Fed funds rate. 
C) equal to the target Fed funds rate. 
D) equal to the repurchase rate.

Question 20

Nationally chartered banks are required to become members of the Federal Reserve System.

Accepted Answer

A) True 
 B)False

Exam 4: The Federal Reserve System, monetary Policy, and Interest Rates

The major asset of the Federal Reserve is

What does the 2004 Check 21 Law allow? Why was this Law passed? Does it benefit the customer or banks? Explain.

The Fed funds rate is the rate that

The major monetary policy-making arm of the Federal Reserve is the

The major liability of the Federal Reserve is

The monetary base is the amount of coin and currency in circulation plus reserves.

During the 2010-2014 period,the Federal Reserve purchased long-term treasury securities as part of the Quantitative Easing program.

The 12 Federal Reserve Banks perform what functions?

Federal Reserve interest rate decisions can be vetoed by the U.S. president or the Congress.

What are the four major functions of the Federal Reserve System?

The Fed changes reserve requirements from 10 percent to 14 percent,thereby eliminating $750 million in excess reserves. The total change in deposits (with no drains)would be (rounded)

How have recent changes in discount window credit programs affected the use of this tool for monetary policy?

What are the intended consequences from charging an interest on excess reserves by Central banks?

Explain how the deposit multiplier works.

The ________ is a network linking over 9,000 banks with the Federal Reserve that is used to transfer deposits and make loan payments between participants.

Federal Reserve Board members are appointed by the U.S. president and confirmed by the Senate for a nonrenewable 14-year term.

What are the main responsibilities of the FOMC?

According to the current FOMC stances,inflation targeting promotes maximum employment.

Before 2003 the discount window loan rate was set

Nationally chartered banks are required to become members of the Federal Reserve System.

Introduction

Determinants of Interest Rates

Interest Rates and Security Valuation

Money Markets

Bond Markets

Mortgage Markets

Stock Markets

Foreign Exchange Markets

Derivative Securities Markets

Commercial Banks: Industry Overview

Commercial Banks Financial Statements and Analysis

Regulation of Commercial Banks

Other Lending Institutions: Savings Institutions, credit Unions, and Finance Companies

Insurance Companies

Securities Firms and Investment Banks

Investment Companies

Pension Funds

Types of Risks Incurred by Financial Institutions

Managing Credit Risk on the Balance Sheet

Managing Liquidity Risk on the Balance Sheet

Managing Interest Rate Risk and Insolvency Risk on the Balance Sheet

Managing Risk Off the Balance Sheet With Derivative Securities

Managing Risk Off the Balance Sheet With Loan Sales and Securitization

Filters