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| 1 | |
The U.S. Federal Reserve system was created in response to: |
| | A) | pressure from banks for more regulatory control over their actions. |
| | B) | demand from the U.S. Treasury for the introduction of a national currency (to replace the banknotes that were issued by state-chartered banks |
| | C) | nto the 1920s). |
| | D) | a series of 21 financial panics between 1870 and 1920. |
| | E) | concern that the money supply was being too rigidly controlled by the Comptroller of the Currency. |
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| 2 | |
Which of the following banks must belong to the Federal Reserve System? |
| | A) | all commercial banks |
| | B) | all savings banks |
| | C) | all nationally chartered banks |
| | D) | all state chartered banks |
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| 3 | |
As a result of a 1980 change in banking law, state-chartered banks that are not members of the Federal Reserve system now: |
| | A) | may hold their reserves in interest-bearing securities instead of in non-interest-bearing deposits at the Fed. |
| | B) | have the same reserve requirements as member banks. |
| | C) | receive lower interest rates on reserve holdings than do member banks. |
| | D) | may no longer hold reserves at the Fed. |
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| 4 | |
The boundaries of the Federal Reserve Districts: |
| | A) | are altered every 5 years to reflect changing population density patterns in the U.S. |
| | B) | were set in 1914. |
| | C) | are altered every 5 years so that there are approximately an equal number of banks in each Federal reserve District. |
| | D) | change annually in response to changing economic and population patterns. |
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| 5 | |
The 12 Federal Reserve Banks that make up the Federal Reserve System are: |
| | A) | federally chartered banks. |
| | B) | private, non-profit organizations. |
| | C) | owned by the commercial banks in their districts. |
| | D) | All of the above are correct. |
| | E) | None of the above is correct. |
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| 6 | |
As the bank for the U.S. government, the Federal Reserve: |
| | A) | issues new currency and destroys old currency. |
| | B) | maintains bank accounts for the U.S. Treasury. |
| | C) | manages U.S. Treasury borrowings. |
| | D) | All of the above are correct. |
| | E) | None of the above is correct. |
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| 7 | |
As a bankers' bank, the Federal Reserve Banks of the Federal Reserve System: |
| | A) | hold reserve deposits for banks in their districts. |
| | B) | provide check-clearing and electronic fund transfer services. |
| | C) | provide discount loans. |
| | D) | All of the above are correct. |
| | E) | None of the above is correct. |
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| 8 | |
The largest Federal Reserve District (in terms of geographical size) is serviced by the: |
| | A) | New York Fed. |
| | B) | Atlanta Fed. |
| | C) | Dallas Fed. |
| | D) | San Francisco Fed. |
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| 9 | |
The discount rate today is, in practice, most directly set by the: |
| | A) | FOMC. |
| | B) | President of the New York Fed. |
| | C) | U.S. President. |
| | D) | Comptroller of the Currency. |
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| 10 | |
One of the factors designed to help provide autonomy for the Fed is: |
| | A) | a 14-year nonrenewable term for members of the Board of Governors. |
| | B) | lifetime appointment for members of the Board of Governors. |
| | C) | that the U.S. Constitution prohibits congressional control of the Fed. |
| | D) | that the Fed is owned and controlled by the member banks, guaranteeing that the Fed engages in actions that benefit these banks. |
| | E) | None of the above is correct, |
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| 11 | |
Which of the following is not one of the duties of the Board of Governors? |
| | A) | setting the reserve requirement |
| | B) | administering consumer credit laws |
| | C) | supervising and regulating the Federal Reserve District Banks |
| | D) | establishing the exchange rate between the dollar and other currencies |
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| 12 | |
The interest rate that the FOMC most directly attempts to control is the: |
| | A) | prime rate. |
| | B) | federal funds rate. |
| | C) | mortgage interest rate |
| | D) | student-loan interest rate. |
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| 13 | |
The Fed may stimulate the economy by: |
| | A) | raising the real interest rate. |
| | B) | lowering the real interest rate. |
| | C) | lowering the nominal interest rate, even if the real interest rate rises. |
| | D) | None of the above is correct. |
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| 14 | |
Under normal circumstances, the FOMC meets to establish monetary policy: |
| | A) | once a week. |
| | B) | roughly every six weeks. |
| | C) | every six months. |
| | D) | once a year. |
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| 15 | |
The policy objectives provided by Congress to the Fed: |
| | A) | provide a detailed statement of specific policy targets for inflation, unemployment, and economic growth. |
| | B) | require that the Fed focus its efforts solely on maintaining a low inflation-rate target. |
| | C) | require the Fed to focus solely on maintaining a low unemployment rate. |
| | D) | only state broad policy objectives, but do not provide specific policy targets. |
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| 16 | |
Monetary policy in the countries that participate in the European Monetary Union is determined by the: |
| | A) | Federal Reserve Board of Governors. |
| | B) | Parliaments of each of the member countries. |
| | C) | central banks for each of the member countries, each of which pursues a separate monetary policy. |
| | D) | the European Central Bank. |
| | E) | None of the above is correct. |
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| 17 | |
The actual implementation of monetary policy in the European Monetary Union is conducted by the: |
| | A) | central banks of the member countries. |
| | B) | European Central Bank. |
| | C) | FOMC. |
| | D) | Treasuries of the Member nations. |
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