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Multiple Choice Quiz
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1
Which of the following is not a function of the 12 Federal Reserve Banks?
A)Clearing checks
B)Conducting monetary policy
C)Providing loans to private banks
D)Holding bank reserves
2
The members of the Federal Reserve Board of Governors:
A)Are appointed by the President of the United States
B)Are appointed for a 12 year term
C)Are not on the Open Market Committee
D)Provide loans to private banks
3
Monetary policy is:
A)The use of tax and federal spending programs to influence the economy
B)The responsibility of Congress and the President
C)The use of money and credit to influence the economy
D)Conducted by the 12 regional Federal Reserve banks
4
The Open Market Committee is responsible for:
A)Loaning money to private banks
B)Holding the reserves of private banks
C)Deciding overall monetary policy
D)The Fed's daily activity in the financial markets
5
Which of the following is not a tool of monetary policy?
A)Changing the reserve requirements
B)Changing the discount rate
C)Increasing federal spending
D)Using open market operations
6
Required reserves are:
A)Equal to a bank's excess reserves
B)Equal to a bank's total deposits times the required reserve ratio
C)Equals a bank's total deposits
D)Equal to a bank's total deposits divided by the required reserve ratio
7
By raising the reserve requirement, the Fed:
A)Immediately reduces the lending capacity of the banking system
B)Immediately increases the banking capacity of the banking system
C)Immediately increases banks' excess reserves
D)Allows the private banks to borrow more cheaply from the Federal Reserve Bank
8
Which of the following is not affected by a change in the reserve requirements:
A)The amount of excess reserves
B)A change in the lending capacity of the banking system
C)Total deposits
D)The money multiplier
9
To meet their required reserve ratios, banks' can:
A)Borrow from the Federal Reserve Bank
B)Borrow from other banks' in the federal funds market
C)Sell assets
D)All of the above
10
To increase the money supply and reduce interest rates, the Fed will:
A)Raise the reserve requirement
B)Sell bonds in the open market
C)Buy bonds in the open market
D)Raise the discount rate of interest
11
When the Fed purchases bonds in the open market:
A)Banks' total reserves increase
B)Banks' required reserve ratio changes
C)Banks' total reserves will not change
D)Short term interest rates will rise
12
Chinese monetary policy has changed to:
A)Increase the money supply to prevent recession
B)An increase in bank reserve requirements to reduce inflationary pressures
C)Lowered bank required reserve ratios
D)None of the above
13
Which of the following would not reduce the money supply:
A)The Fed buys bonds in the open market
B)The Fed sells bonds in the open market
C)The Fed lowers the reserve requirement
D)The Fed raises the discount rate
14
The tool which is used most frequently by the Fed is:
A)Changing the reserve requirements
B)Changing the discount rate
C)Changing the federal funds rate
D)Using open market operations
15
The Federal Reserve bank has lost some control over the money supply due to:
A)The growth of money market accounts at brokerage houses
B)Large corporations now loan money
C)Globalization of lending activity
D)All of the above





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