BNAD 301 Exam 3 - Ch.13
Members of Congress are able to influence monetary policy, albeit indirectly, through their ability to
Propose legislation that would force the Fed to submit budget requests to Congress, as must other government agencies
The Federal Reserve Banks are _____ institutions since they are owned by the _______.
Quasi-public; private commercial banks in the district where the Reserve Bank is located
Although neither _______ nor the ______ are officially set by the Federal Open Market Committee, decisions concerning these policy tools are effectively made by the committee
Reserve requirements; discount rate
Which of the following functions is not performed by any of the twelve regional Federal Reserve Banks?
Setting interest rates payable on time deposits
Which of the following is a duty of the Board of Governors of the Federal Reserve System?
Setting margin requirements, the fraction of the purchase price of the securities that has to be paid for with cash
The Federal Open Market Committee consists of the
Seven members of the Board of Governors and five presidents of the regional Fed banks
Member of commercial banks have purchased stock in their district Fed banks; the dividend paid by that stock it limited by law to ____ percent annually
Six
Each Federal Reserve bank has nine directors, Of these _____ are appointed by the member bank and ______ are appointed by the Board of Governors
Six; three
The Governing Council usually meet ______ times a year
Twelve
The First Bank of the United States
Was disbanded in 1811 when its charter was not renewed
The theory of bureaucratic behavior when applied to the Fed helps to explain why the Fed
Was so secretive about the conduct of future monetary policy
Of all commercial banks, about ______ percent belong to the Federal Reserve System
38
The nine directors of the Federal Reserve Banks are split into three categories; ______ are professional bankers, _______ are leaders from industry, and ______ are to represent the public interest and are not allowed to be officers, employees, or stockholders of banks
3; 3; 3
The three largest Federal Reserve banks (New York, Chicago, and San Francisco) combined hold more than ______ percent of the assets of the Federal Reserve System
50
There are ______ members of the Board of Governors of the Federal Reserve System
7
The financial panic of 1907 resulted in such widespread bank failures and substantial losses to depositors that the American public finally became convinced that
A central bank was needed to prevent future panics
Banks subject to reserve requirements set by the Federal Reserve System include
All banks whether or not they are members of the Federal Reserve System
The strongest argument for an independent Federal Reserve rests on the view that subjecting the Fed to more political pressures would impart
An inflationary bias to monetary policy
Members of the Board of Governors are
Appointed by the president of the United States and confirmed by the Senate
The research document given to the Federal Open Market Committee that contains information on the state of the economy in each Federal Reserve district is called the
Beige book
Under the European System of Central Banks, the Executive Board is similar in structure to the _____
Board of Governors
An important function of the regional Federal Reserve Banks is
Clearing checks
The Fed's support of the Depository Institutions Deregulation and Monetary Control Act of 1980 stemmed in part from its
Concern over declining Fed membership
The case for Federal Reserve independence does not include the idea that
Policy is always performed better by an elite group such as the Fed
What makes the Federal Reserve so unique compared to other central banks around the world is its
Decentralized structure
Subject to the approval of the Board of Governors, the decision of choosing the president of a district Federal Reserve Bank is made by
District bank directors who are not professional bankers
Members of the Executive Board of the European System of Central Banks are appointed to ______ year, nonrenewable terms
Eight
The Federal Open Market Committee usually meets _____ times a year
Eight
The Depository Institutions Deregulation and Monetary Control Act of 1980
Established uniform reserve requirements for all banks
The political business cycle refers to the phenomenon that just before elections, politicians enact _______ policies. After the elections, the bad effects of these policies (for example, _______) have to be counteracted with ______ policies.
Expansionary; a higher inflation rate; contractionary
The Federal Reserve entity that makes decisions regarding the conduct of open market operations is the
Federal Open Market Committee
Under the European System of Central Banks, the Governing Council is similar in the structure to the ______ of the Federal Reserve System
Federal Open Market Committee
Under the European System of Central Banks, the National Central Banks have the same role as the ______ of the Federal Reserve System
Federal Reserve Banks
Each Fed bank president attends FOMC meetings; although only _____ Fed bank presidents vote on policy, all ______ provide input
Five; twelve
The Chairman of the Board of Governors is closed from among the seven governors and serves a ____ term
Four - year
The Second Bank of the United States
Had its charter renewal vetoed in 1832
The Federal Open Market Committee's "balance of risks" is an assessment of whether, in the future its primary concern will be
Higher inflation or a weaker economy
The theory of bureaucratic behavior suggests that the objective of a bureaucracy is to maximize
Its own welfare
All _____ are required to be members of the Fed
Nationally chartered banks
The Federal Reserve Bank of ______ plays a special role in the Federal Reserve System because it houses the open market desk
New York
The president from which Federal Reserve Bank always has a vote in the Federal Open Market Committee
New York
Each governor on the Board of Governors can serve
One full nonrenewable fourteen year term plus part of another term
While the discount rate is "established" by the regions Federal Reserve Banks, in truth, the rate is determined by
The Board of Governors
Which of the following is NOT an entity of the Federal Reserve System?
The Comptroller of the Currency
Which of the following is an entity of the Federal Reserve System?
The FOMC
The public's fear of centralized power and distrust of moneyed interests let to the demise of the first two experiments in central banking, otherwise known as
The First Bank of the United States and the Second Bank of the United States
Goal independence is the ability of ______ to set monetary policy ______
The central bank; goals
Instrument independence is the ability of _____ to set monetary policy ______
The central bank; instruments
Critics of the current system of Fed independence content that
The current system is undemocratic
Prior to 1980, member banks left the Federal Reserve System due to
The high cost of required reserves
Recent research indicates that inflation performance (low inflation) has been found to be best in countries with
The most independent central banks
The majority of members of the Federal Open Market Committee are
The seven Federal Reserve governors