ECO 315 Chapter 16
In which of the following cities, is a regional Federal Reserve Bank located?
- Chicago, Illinois - New York, New York - St. Louis, Missouri - Kansas City, Kansas - Cleveland, Ohio
Which of the following is an argument against the independence of the Federal Reserve System (Fed) from all political influences?
- It is undemocratic to have monetary policy controlled by an elite and exclusive group - To achieve economic goals, it makes sense to place both monetary and fiscal policies under the control of the Congress and the President.
Which of the following ensures the independence of the Federal Reserve System (Fed) from political influences?
- Members of the Board of Governors have a non-renewable 14-year term - The Fed Chairperson does not have to report to the President of the U.S. - The Fed is not subject to audit for its monetary policy actions - The Fed earns its own income. - The Federal Reserve Banks guarantee their employees permanent job
Which of the following constitutes the Fed (=Federal Reserve System)?
- The 12 regional Federal Reserve Banks - The Board of Governors - The Federal Open Market Committee
Which of the following is true about the New York Federal Reserve Bank?
- The Federal Open Market Committee (FOMC) conducts its operations out of this New York Federal Reserve Bank - The president of the New York Federal Reserve Bank can always vote on the matters of the Federal Open Market Committee (FOMC) - stores gold for the U.S. government - stores gold for foreign governments - can trade in the foreign exchange market - trades the U.S. Treasury securities
Which of the following are NOT funded by the Congress's Appropriation Process?
- The Federal Reserve Board - The 12 regional Federal Reserve Banks - The Federal Open Market Committee
Which of the following is a source of income to the Federal Reserve System (Fed)?
- The interest income from the discount loans made - The interest earned on the U.S. Treasury securities bought and held at the Fed - The fee income from check-clearing and wire-transfer services.
Which of the following does not ensure the independence of the Federal Reserve System (Fed) from political influences?
- The position of the Chairperson of the Board of Governors has a 4-year renewable term. - The Fed is subject to the Congressional hearings under the Humphrey-Hawkins Act
The voting members of the Federal Open Market Committee (FOMC) include ______.
- The vice chairperson of the Federal Reserve Board - the president of the New York Federal Reserve Bank - a few president of the regional Federal Reserve Banks
When the Federal Reserve System wants to increase money supply in the economy, it can _______.
- buy the U.S. Treasury securities from banks - lower the required reserves at the banks
The Federal Open Market Operations involve _______.
- buying the U.S. Treasury securities -selling the U.S. Treasury securities
The Federal Reserve System (Fed) must be independent from all political influences because ________.
- debt monetizing should never occur - The monetary policy makers at the Fed must be allowed to have a long-term view
Which of the following functions does each of the 12 regional Federal Reserve Banks play?
- examine bank holding companies - collect data on local business conditions - conduct research on economic affairs - establish the discount rate and approve the discount loan - clear checks - destroy worn out money
Which of the following is a monetary policy tool used by the Fed?
- the open market operations - the discount rate and discount loan policy - the reserve requirements
The 12 regional Federal Reserve Banks are an important component of the Federal Reserve System. Their web addresses contain the suffix in the top domain _____.
.org
What year was the Federal Reserve Act passed?
1913
How many of the regional Federal Reserve Bank presidents can vote in the Federal Open Market Committee (FOMC)?
5
The Federal Open Market Committee (FOMC) is operated out of ______ Federal Reserve Bank.
New York
Which one of the following regional Federal Reserve Bank presidents is the permanent member of the Federal Open Market Committee (FOMC)?
New York
The position of Chairperson of the Federal Reserve Board is appointed by the _________.
President
Which of the following is not true about the Federal Reserve System (Fed)?
The Fed has to recieve its annual budget from the Congress.
The National Banking Act was passed before ________.
The Federal Reserve Act
Which of the following is NOT a source of income to the Federal Reserve System (Fed)?
The fee income from granting bank charters
Which member(s) of the Fed's Board of Governors are appointed by the President and confirmed by the Senate.
Vice Chairperson
Which of the following cities do NOT have a regional Federal Reserve Bank?
Washington, D.C.
Even though the 12 regional Federal Reserve Banks work very closely under the direction of the Board of Governors, they are technically _______.
a not-for-profit organization
The Bank of International Settlement (BIS) is _______.
an organization of central banks in the world
If a Fed's Governor replaces another Governor, he/she ________ the remainder of the departing Governor's term.
can serve
The Federal Reserve System (Fed) has been making profits of ________ in recent years.
closer to $100 billion
Which of the following is an argument for the independence of the Federal Reserve System (Fed) from all political influences?
debt monetiainz must not occur
When the Federal Reserve Banks cut down (or reduce) on discount loans to banks, this will tend to ______ liquidy and thus, will result in ______ interest rates.
decrease; higher
When the Federal Reserve Banks cut down (or reduce) on discount loans to banks, this will tend to ______ money supply and thus, will result in ______ interest rates.
decrease; higher
When the Federal Reserve System sells the U.S. Treasury securities to banks, this will ______ liquidity and thus, will result in ______ interest rates.
decrease; higher
When the Federal Reserve System sells the U.S. Treasury securities to banks, this will ______ money supply and thus, will result in ______ interest rates.
decrease; higher
The interest rate on the loan given to banks by the Federal Reserve Bank is known as the ______.
discount rate
Each member of the Board of Governors at the Fed is replaced every _____ year and his/her term expires on the last day of ________.
even-numbered; January
Which of the following functions does each of the 12 regional Federal Reserve Banks NOT play?
examine large insurance companies
When the Federal Reserve Banks make discount loans liberally to banks, this will tend to ______ liquidy and thus, will result in ______ interest rates.
increase; lower
When the Federal Reserve Banks make discount loans liberally to banks, this will tend to ______ money supply and thus, will result in ______ interest rates.
increase; lower
When the Federal Reserve System buys the U.S. Treasury securities from banks, this will ______ money supply and thus, will result in ______ interest rates.
increase; lower
If the Federal Reserve System decides to increase required reserves for the banks, this will cause ______ liquidity and thus, will result in _____ interest rates.
less; higher
The full term of the Board of Governors is _____ and lasts _____.
non-renewable; 14 years
According to Professor Choi, China uses the _________ as the main tool for implementing monetary policy.
reserve requirements
If you want to increase interest rates, you would instruct the Federal Open Market Operations to _______ the U.S. Treasury securities.
sell
When the Federal Reserve System wants to decrease liquidity in the economy, it can _______.
sell the U.S. Treasury securities to banks
When the Federal Reserve System wants to increase interest rates, it can _______.
sell the U.S. Treasury securities to banks
There are ___ members of the Board of Governors whose terms are ______.
seven; non-renewable
The Federal Open Market Committee (FOMC) is a part of the Federal Reserve System that conducts monetary policy. Its main function is to maintain price stability by regulating ______.
the Federal Funds rate
The regulatory agency that sets reserve requirements for all banks is
the Federal Reserve System.
The voting members of the Federal Open Market Committee (FOMC) do not include ______.
the Secretary of the U.S. Treasury Department
When the Federal Reserve System makes profits, it must return the profits to _______.
the U.S. Treasury Department