study

Open Market Operations.

Buying and selling U.S. Treasury Securities for the Fed's own portfolio is called: a. Managing the float. b. Discount buying. c. Open Market Operations. d. Reserve adjustment.

Altering the real interest rate when inflation is changing quickly

Changes in the federal funds rate influence the economy's growth rate through all of the following except by: A. Making it more or less attractive to people save B. Making it more or less expensive to borrow C. Making investment spending more or less attractive D. Altering the real interest rate when inflation is changing quickly

All of the above.

Changes in the federal funds rate influence the economy's growth rate: a. By making it more or less attractive to people save. b. By making it more or less expensive to borrow. c. By making investment spending more or less attractive. d. By altering the real interest rate. e. All of the above.

Most elect not to join the system

Considering State chartered banks: a. Most elect to join the Federal Reserve System. b. Those with assets exceeding $100 million must join the Federal Reserve System. c. Most elect not to join the system. d. Only those that join the system must abide by reserve requirements. e. c and d

No district coincides with a single state.

Considering the Federal Reserve Districts which of the following is true: a. With the exception of New York, no district coincides with a single state. b. No district coincides with a single state. c. Some districts are made up of single states. d. The districts are divided with equal population.

Cabinet or ministry level of authority.

Criteria used to judge a central bank's independence include each of the following, EXCEPT: a. Budgetary Independence. b. Long terms for members. c. Cabinet or ministry level of authority. d. Irreversible decisions.

No more than one governor can come from the same district.

Current law regarding the Fed's Board of Governors stipulates that: a. No more than three governors can come from the same district. b. No more than two governors can come from the same district. c. Every district must have at least one governor on the board. d. No more than one governor can come from the same district.

All banks, member or not.

Currently the requirement of holding a non-interest earning reserve account at the Fed must be met by: a. All banks, member or not. b. Only member banks. c. Member banks and non-member banks over $100 million in assets. d. Only nationally chartered banks.

b and c

During World War II, the Fed accommodated the war effort by: a. Significantly curtailing credit in the economy. b. Keeping bond prices high and interest rates low. c. Purchasing any Treasury Securities the public did not purchase. d. a and c e. b and c

Appointed by the bank's board but approved by the board of governors.

Each of the Reserve Banks has a president who is: a. Appointed by the bank's board but approved by the board of governors. b. Appointed by the board of governors but approved by the bank's board of directors. c. Elected by the commercial banks in their district. d. Selected from the Board of Directors.

Nine.

Each of the Reserve banks of the Fed has a board of directors which numbers: a. Seven b. Nine c. Twelve d. Fourteen

Five-year term.

Each president of a Reserve Bank serves for a: A. Fourteen-year term. B. Five-year term. C. Seven-year term. D. Two-year renewable term.

Fairly formal sessions with little to no give and take.

FOMC meetings would best be described as: a. Informal meetings with significant give and take among participants. b. An informal meeting with the Chairman as a passive observer. c. Fairly formal sessions with little to no give and take. d. A press conference, where the financial press can ask questions regarding the Fed's view of the economy.

Exporter and importer interests are reflected.

In considering the different interest in structuring the Fed, each is true, EXCEPT: a. Banker and business interest are reflected. b. State and regional interest are reflected. c. Government (public) and private interest are reflected. d. Exporter and importer interests are reflected.

Issue new currency. / Managing U.S. Treasury borrowings

In its role as the Banker's bank, the Federal Reserve performs the following services, EXCEPT: a. Collect and make available data on business conditions. b. Make discount loans. c. Issue new currency. / Managing U.S. Treasury borrowings d. Clearing paper checks and transferring funds electronically.

Make discount loans.

In their role as the Government's bank, the Federal Reserve performs the following services, EXCEPT: a. Issue new currency. b. Make discount loans. c. Maintain the U.S. Treasury's bank account. d. Manage U.S. Treasury borrowings.

a and c

Member banks of the Federal Reserve System include: a. All nationally chartered banks. b. All state chartered banks with assets exceeding $100 million. c. State chartered banks that decide to join. d. a and b e. a and c

Serve one non-renewable fourteen year term.

Members of the Board of Governors of the Fed: a. Can be reappointed after their term expires. b. Must leave office when there is a new administration elected. c. Serve one non-renewable fourteen year term. d. Are appointed for life, though they can resign at any time.

Returned to the U.S. Treasury.

Most of the Fed's income is: A. Paid to member banks in the form of a dividend. B. Sent to the FDIC to shore up the depositor insurance fund. C. Returned to the U.S. Treasury. D. Used to build the Fed's portfolio of securities.

Returned to the U.S. Treasury.

Most of the revenue generated by the Fed is: a. Paid to member banks in the form of a dividend. b. Sent to FDIC to shore up the depositor insurance fund. c. Returned to the U.S. Treasury. d. Is used to build the Fed's portfolio of securities.

Observe a blackout period that lasts until the Friday following the meeting where they do not speak publicly about economic or monetary policy issues.

Once the FOMC announces the result of their meeting the attendees: a. Must brief the financial news immediately after and answer questions posed to them. b. Observe a twenty-four blackout period where they do not speak publicly about monetary policy. c. Observe a blackout period that lasts until the Friday following the meeting where they do not speak publicly about economic or monetary policy issues. d. Never discuss the policy issues addressed in the meetings.

In a little more than one hour.

Once the FOMC meetings adjourn, the public is made aware of the FOMC's decision: a. In a little more than one hour. b. Forty-eight hours after the meeting adjourns. c. Within five business days. d. Twenty-four hours after the meeting adjourns.

States feared centralization of power

One reason it took so long to have a central bank in the United States is that: A. It wasn't needed B. States feared centralization of power C. State currencies worked fine D. All of the above

States feared centralization of power.

One reason it took so long to have a central bank in the United States is: a. It wasn't needed. b. States feared centralization of power. c. States currencies worked fine. d. All of the above.

The Fed cannot prevent a stock market decline.

One valuable lesson investors should learn from the stock market behavior during the late 1990s and early 2000s is: a. The Fed can control the stock market. b. The Fed can reduce the idiosyncratic risk of investing but not the systematic risk. c. The Fed can eliminate the risk from investing. d. The Fed cannot prevent a stock market decline.

Non member banks did not have to hold non-interest earning reserve deposits at the Fed.

Prior to 1980: a. Member banks of the Federal Reserve did not have to hold non-interest earning reserve deposits at the Fed. b. Non member banks had to hold non-interest earning reserve deposits at the Fed. c. Non member banks did not have to hold non-interest earning reserve deposits at the Fed. d. All banks member or not had to hold reserve deposits at the Fed in a non-interest earning account.

Make discount loans.

The Board of Governors of the Fed performs each of the following functions, EXCEPT: a. Analyzes financial and economic conditions. b. Sets the reserve requirement. c. Approve bank merger applications. d. Make discount loans.

The Secretary of the Treasury.

The Board of Governors of the Federal Reserve System includes the following, EXCEPT: a. Academic economists. b. Economic forecasters. c. The Secretary of the Treasury. d. Bankers.

Seven

The Board of Governors of the Federal Reserve System numbers: a. Twelve, one for each district. b. Seven c. Nine d. Fourteen

Is selected from the Board of Governors, appointed by the U.S. President.

The Chairman of the Board of Governors: a. Serves a four year term that cannot be renewed. b. Is selected from the Board of Governors, appointed by the U.S. President. c. Serves the same four year term as the U.S. President. d. Serves an eight year term.

The Chairman of the Board of Governors.

The Chairman of the FOMC is: a. The Secretary of the Treasury. b. The Vice-Chairman of the Board of Governors. c. The Chairman of the Board of Governors. d. The President of the New York Fed.

Inflation is slow to adjust. / If inflation doesn't change quickly

The FOMC controls the real interest rate if: a. Inflation changes quickly. b. Inflation is slow to adjust. / If inflation doesn't change quickly c. Only if they adjust the federal funds rate to match the changes in the rate of inflation. d. None of the above.

Internally generated funds from interest on securities it holds and fees for services provided.

The Fed's revenue comes from: a. Congressional appropriation. b. The Department of Commerce. c. Internally generated funds from interest on securities it holds and fees for services provided. d. Solely from taxes placed on member banks.

1936

The Federal Open Market Committee began operating is: a. 1913 b. 1929 c. 1914 d. 1936.

Foreign interests.

The Federal Reserve Act explicitly requires that the board of governors represents each of the following, EXCEPT: a. Commercial interests. b. Foreign interests. c. Financial Interests. d. Agricultural interest.

b and c

The Federal Reserve Bank of New York is unique from other Reserve banks because: a. It is the only bank that serves just one state. b. It is the only Reserve bank that stores gold. c. It is where the Federal Reserve System's portfolio is managed. d. a and c e. b and c

San Francisco

The Federal Reserve District that covers the largest geographic area is serviced by the Bank located in: A. Chicago B. Richmond C. Atlanta D. San Francisco

None of the above.

The Federal Reserve District that covers the largest geographic area is serviced by the bank located in: a. Chicago b. Richmond c. Atlanta d. None of the above.

Economic and political forces as well as population distribution.

The Federal Reserve Districts are a product of: a. Solely population distribution in 1914. b. Solely economic forces that existed in 1914. c. Economic and political forces that existed in 1914. d. Economic and political forces as well as population distribution.

Three branches with overlapping responsibilities.

The Federal Reserve System is composed of: a. Five branches with clear responsibilities. b. Six branches with overlapping responsibilities. c. Three branches with overlapping responsibilities. d. Twelve branches with clear responsibilities.

Conducting open market operations from their banks.

The Federal Reserve banks play a role in formulating monetary policy by each of the following, EXCEPT: a. Conducting open market operations from their banks. b. Participating in FOMC meetings. c. Participation in setting the discount rate. d. Making discount loans.

1913

The Federal Reserve was created in: a. 1929 b. 1913 c. 1909 d. 1945

Eight times a year.

The Federal Reserve's Open Market Committee usually meets: a. Monthly. b. Bi-weekly. c. Eight times a year. d. Once every quarter, unless a crisis warrants more frequent meetings.

The President of the United States.

The Governors of the Federal Reserve System are appointed by: a. The member banks from their home district. b. The Board of Directors of the Reserve bank from their home district. c. The President of the United States. d. The Chairman of the Federal Reserve System.

Fourteen years

The Governors of the Federal Reserve System serve terms of: a. Four years that can be renewed. b. Fourteen years c. Four years, the same as the U.S. President and are not renewable. d. Seven years.

The Reserve bank in San Francisco.

The Largest Federal Reserve District geographically is serviced by: a. The Reserve bank in San Francisco. b. The Reserve bank in Chicago. c. The Reserve bank in New York. d. The districts are divided fairly equally.

The commercial banks in their district.

The Reserve banks of the Federal Reserve System are owned by: a. The taxpayers in their district. b. The U.S. Treasury. c. The Board of Governors. d. The commercial banks in their district.

Only the information in the Beige book.

The attendants of the FOMC meetings receive information prior to the meetings that is contained in books with colorful names, the information released to the public prior to the meetings is: a. Only the information in the Blue book. b. Only the information in the Beige book. c. Information in the Blue and Green books, but not the Beige book. d. Information in the Beige and Blue books but not the information in the Green book. e. No information is released to the public prior to the meetings.

A nominal interest rate.

The federal funds rate is stated as: a. A real interest rate. b. A nominal interest rate. c. A rate that is automatically indexed to inflation. d. None of the above.

Banks charge each other for overnight loans on their excess deposits at the Fed

The federal funds rate is the interest rate: A. The Fed charges banks who borrow from it B. Banks charge each other for overnight loans on their excess deposits at the Fed C. The U.S. Treasury charges banks that need emergency funds D. The FDIC charges banks that need to borrow from it to meet depositor demands

The interest rate banks charge each other for overnight loans of their excess reserves at the Fed.

The federal funds rate is: a. The interest rate the Fed charges banks who borrow from them. b. The interest rate banks charge each other for overnight loans of their excess reserves at the Fed. c. The interest rate the U.S. Treasury charges banks that need emergency funds. d. The interest rate the FDIC charges banks who need to borrow from them to meet depositor demands.

Five years after the FOMC meeting in which it is used.

The information contained in the Fed's Blue and Green books is released to the public: a. Immediately after the FOMC meeting in which it is used. b. Within two weeks after the FOMC meeting in which it is used. c. It is never released to the public. d. Five years after the FOMC meeting in which it is used.

Cannot be changed by anyone other than the FOMC.

The interest rate changes that result from the FOMC meetings: a. Can be altered only by Congress. b. Can be altered by the Secretary of the Treasury during an economic crisis. c. Cannot be changed by anyone other than the FOMC. d. Can only be altered during a time of crisis by the U.S. President.

The federal funds rate.

The interest rate that the FOMC currently targets is: a. The federal funds rate. b. The 30 year Treasury bond rate. c. The discount rate. d. The prime rate.

New York City.

The largest of the Federal Reserve Banks is located in: a. Washington D.C. b. San Francisco since it serves almost one-third of the country. c. New York City. d. Kansas City.

There is decision making by committee.

The likelihood that the Fed will implement a change that will seriously harm the economy is minimized by the fact that: a. Only bright, well-intentioned people are appointed to key roles at the Fed. b. Congress can remove the Chairman of the Fed at any time. c. The Board of Governors ultimately must answer to the U.S. President since he can replace them. d. There is decision making by committee.

Twelve

The number of regional Federal Reserve Banks is: a. Nine b. Seven c. Five d. Twelve.

12

The number of voting members on the Federal Open Market Committee is: a. 7 b. 12 c. 19 d. 8

By design, quite vague, allowing the Fed to really set their goals.

The objectives set for the Fed by Congress are: a. Very specific, this adds to the Fed's accountability. b. By design, quite vague, allowing the Fed to really set their goals. c. Specific regarding inflation, but vague on all other goals. d. Specific on the growth rate for the economy, but vague on all other objectives.

a and c

The permanent voting members on the FOMC include: a. The Board of Governors of the Fed. b. The Secretary of the Treasury. c. The President of the Federal Reserve Bank of New York. d. a and b e. a and c

Simply instructs the staff of the New York Fed to buy and sell securities to maintain the interest rate at the target rate.

The policy directive that is produced from the FOMC meeting: a. Details the exact amount of U.S. Treasury securities the System Open Market Account Manager is to purchase or sell. b. Sets the specific discount rate for the next eight weeks. c. Sets the specific range that the target interest rate can fall within. d. Simply instructs the staff of the New York Fed to buy and sell securities to maintain the interest rate at the target rate.

A five year term

The presidents of the Reserve banks serve for a: a. A fourteen year term. b. A five year term c. A seven year term. d. A two year renewable term.

Decide on the target interest rate

The primary purpose of meetings of the FOMC is to: A. Set the required reserve rate B. Set the discount rate C. Decide on the target interest rate D. Set the prime rate

To set the federal funds rate.

The primary purpose of meetings of the FOMC is: a. To set the required reserve rate. b. To set the discount rate. c. To set the federal funds rate. d. All of the above.

The Chairman of the Board of Governors.

The real power in the FOMC lies with: a. The President of the New York Fed Bank. b. The System Open Market Manager. c. The Chairman of the Board of Governors. d. Power is equally share in the FOMC among all participants.

Only by the Reserve bank in New York.

The services the Federal Reserve provides to foreign central banks and other international organizations are handled: a. Directly by the Board of Governors in Washington D.C. b. By all of the Reserve banks. c. Only by the Reserve bank in New York. d. Only by the Reserve bank in San Francisco.

The Federal Deposit Insurance Corporation.

The three branches of the Federal Reserve System include each of the following, EXCEPT: a. The Board of Governors. b. The Federal Deposit Insurance Corporation. c. The Federal Open Market Committee. d. The Twelve regional Reserve Banks.

The Appointees to the board are subject to U.S. Senate confirmation.

To ensure that the Board of Governors is not unduly influenced by any President: a. The Appointees to the board are subject to U.S. Senate confirmation. b. The Governors serve short two year renewable terms. c. The Governors must be approved by the Secretary of the Treasury. d. The Governors must be approved by both houses of Congress.

a and c

To make sure the U.S. President cannot unduly influence the Board of Governors: a. The terms of the governors are staggered. b. The law prevents a president from appointing more than one governor. c. The terms of the governors are long fourteen years. d. a and b e. a and c

The terms of the governors are staggered.

To make sure the U.S. President cannot unduly influence the Board of Governors: A. The terms of the governors are staggered. B. The law prevents a resident from appointing more than one governor. C. The terms of the governors are ten years long. D. Only three governors can be replaced in any one year.

The blue book

Which of the books used at the FOMC meetings contains a discussion of financial markets and current policy options? A. The blue book B. The beige book C. The green book D. Both the beige and green books

The beige book

Which of the books used at the FOMC meetings contains anecdotal information collected by the Federal Reserve Banks? A. The blue book B. The beige book C. Both the blue and green books D. Both the beige and blue books

The blue book and the green book.

Which of the books used at the FOMC meetings is/are treated as secret documents and not released to the public until after a number of years have passed? A. The blue book and the beige book. B. The beige book and the green book. C. The blue book and the green book. D. Only the blue book.

The green book

Which of the books used at the FOMC meetings the Board staff's economic forecast for the next few years? A. The blue book B. The beige book C. The green book D. Both the beige and blue books

Denver

Which of the following cities does not house a Federal Reserve Bank? a. Denver b. Atlanta c. San Francisco d. Chicago

Philadelphia

Which of the following cities has a Federal Reserve Bank located in it? a. Denver b. Philadelphia c. Detroit d. Miami

Board of Governors

Which of the following is responsible for invoking the Fed's emergency powers? A. FOMC B. Board of Governors C. Fed Chairman D. A majority of the Federal Reserve Bank presidents

Congress

Which of the following statements best completes the following: "The Fed's independence can only be revoked by ..."? a. The U.S. President. b. The Secretary of the Treasury. c. Congress. d. No one since the Fed was created as part of the U.S. Constitution.

The Secretary of the Treasury and the Comptroller of the Currency were removed from the Board of Governors.

A large step toward independence occurred for the Fed in 1935 when: a. The Fed went from two to twelve districts. b. The Secretary of the Treasury and the Comptroller of the Currency were removed from the Board of Governors. c. The Chairman of the Board of Governors was no longer a cabinet position. d. All of the above.

The Chairman's term does not coincide with the Presidential term.

As a means to make sure the U.S. President cannot unduly influence the Chairman of Board of Governors: a. The Chairman's term does not coincide with the Presidential term. b. The President cannot reappoint the Chairman. c. The Chairman cannot serve for more than four years. d. None of the above.

Changing the appointment process for Reserve Bank Presidents

As a result of the 2007-2009 financial crisis, which of the following has been proposed as a change to the Federal Reserve? A. Changing the appointment process for Reserve Bank Presidents B. Increasing the number of regional banks to 15 C. Limiting the number of consecutive terms a Chairman may serve D. Linking the FOMC to the US Treasury by making the Secretary of the Treasury a member of the FOMC