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| 1 | |
The "FOMC": |
| | A) | is part of the Federal Reserve System. |
| | B) | has members which are appointed by Congress. |
| | C) | is part of the SEC. |
| | D) | registers bonds that will be publicly offered. |
| | E) | (c) and (d) |
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| 2 | |
Which of the following qualifies as a potential Federal Reserve monetary policy action? |
| | A) | changing required reserve ratios. |
| | B) | buying or selling securities in the open market. |
| | C) | raising or lowering individual income tax rates. |
| | D) | raising or lowering corporate income tax rates. |
| | E) | (a) and (b) |
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| 3 | |
The __________ became the official currency of twelve European countries in early 2002. |
| | A) | yuan |
| | B) | U.S. dollar |
| | C) | euro |
| | D) | krone |
| | E) | pound |
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| 4 | |
The Federal Reserve System: |
| | A) | was established in the 1950s. |
| | B) | operates the New York Stock Exchange. |
| | C) | has bank supervision and regulatory responsibilities. |
| | D) | originated with a public offering of stock to the public. |
| | E) | (a) and (b) |
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| 5 | |
The _________________ is the interest rate charged by the Federal Reserve Banks when lending to banks. |
| | A) | discount rate |
| | B) | federal funds rate |
| | C) | repo rate |
| | D) | prime rate |
| | E) | loanable funds rate |
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| 6 | |
When the Federal Reserve buys or sells government securities, it is using the tool of monetary policy known as: |
| | A) | reserve requirements |
| | B) | capital requirements |
| | C) | open market operations |
| | D) | bank supervision and regulation |
| | E) | the discount rate |
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| 7 | |
If a bank chooses to hold more reserves than regulations require, we say that the bank is holding: |
| | A) | federal funds |
| | B) | cash items in process of collection |
| | C) | excess capital |
| | D) | repurchase agreements |
| | E) | excess reserves |
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| 8 | |
The "federal funds rate" is a/an: |
| | A) | the interest rate charged on loans from the Federal Reserve. |
| | B) | the interest rate paid by the U.S. Treasury when it borrows. |
| | C) | the rate at which the Federal budget deficit is growing. |
| | D) | the interest rate charged by the U.S. Treasury when the Federal Reserve borrows from it. |
| | E) | the interest rate on short-term loans, between financial institutions. |
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| 9 | |
The Federal Reserve uses _____________ in implementing monetary policy, when its objective is to have a temporary effect on bank reserves. |
| | A) | reserve requirements |
| | B) | the discount rate |
| | C) | repurchase agreements |
| | D) | margin requirements |
| | E) | interest rate ceilings |
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| 10 | |
The "trading desk," where the Federal Reserve's open market trades are initiated is located in: |
| | A) | Kansas City |
| | B) | Washington, D.C. |
| | C) | Chicago |
| | D) | New York City |
| | E) | Philadelphia |
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| 11 | |
Suppose banks have no desire to hold excess reserves, and people use only checking account money. Suppose further that the Federal Reserve buys $10 million of securities on the open market. If the reserve requirement for checking accounts is 10%, what will the ultimate impact be on checking account deposits in the banking system? |
| | A) | Increase of $10 million |
| | B) | Increase of $ 1 million |
| | C) | Decrease of $11 million |
| | D) | Decrease of $10 million |
| | E) | Increase of $100 million |
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| 12 | |
There are total of _______________ Federal Reserve districts. |
| | A) | 3 |
| | B) | 7 |
| | C) | 12 |
| | D) | 24 |
| | E) | 51 |
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| 13 | |
The "monetary base" is simply: |
| | A) | the total vault cash held among all depository institutions |
| | B) | the face value of all U.S. government securities outstanding |
| | C) | the amount of borrowing from the Federal Reserve, by all depository institutions |
| | D) | the total of all currency in circulation, outside banks |
| | E) | the total of currency in circulation, plus depository institution reserves and vault cash |
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| 14 | |
The Federal Reserve's "seasonal credit program" extends credit: |
| | A) | for any purpose, to depository institutions which are generally sound. |
| | B) | to depository institutions that demonstrate a pattern of intra-year fluctuations in funding need. |
| | C) | only for dire emergency situations, as in the case of a failing depository institution. |
| | D) | to farmers, whose working capital needs are highly seasonal. |
| | E) | to depositors who have lost their money due to the failure of a depository institution. |
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| 15 | |
Which of the following Federal Reserve actions would, generally, be viewed as having a "contractionary" impact on the money supply? |
| | A) | decreasing the required reserve ratio(s) |
| | B) | decreasing the discount rate |
| | C) | open market sales of securities |
| | D) | All of the above |
| | E) | (a) and (b), but not (c) |
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| 16 | |
Since the early 1990s, the Federal Reserve has used _________________ as its main target variable to guide its monetary policy actions—and the FOMC regularly announces a target for this variable. |
| | A) | the federal funds rate |
| | B) | the discount rate |
| | C) | non-borrowed reserves |
| | D) | borrowed reserves |
| | E) | M1 |
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| 17 | |
Various countries around the world have "central banks." These would include: |
| | A) | the Federal Reserve |
| | B) | the Bank of Japan |
| | C) | the Bank of China |
| | D) | all of the above |
| | E) | (b) and (c), but not (a) |
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