Chapter 16 Money and Banking

C. 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.

C. 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.

B. 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.

D. 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.

A. All banks, member or not.

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

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

Each of the Reserve Banks has a president who is: a. appointed by the bank's board of directors 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.

B. 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.

B. Seven.

How many members are on the Board of Governors of the Federal Reserve System? a. Twelve, one for each district b. Seven c. Nine d. Fourteen

B. Nine

How many members belong to the board of directors for each of the Reserve Banks of the Fed? a. Seven b. Nine c. Twelve d. Fourteen

B. Making discount loans.

In its role as bank for the U.S. government, the Federal Reserve performs all of the following services, except: a. issuing new currency. b. making discount loans. c. maintaining the U.S. Treasury's bank account. d. managing U.S. Treasury borrowings.

C. Managing U.S. Treasury borrowings.

In its role as the bankers' bank, the Federal Reserve performs all of the following services, except: a. collecting and making available data on business conditions. b. making discount loans. c. managing U.S. Treasury borrowings. d. clearing paper checks and transferring funds electronically.

C. Nationally chartered banks and state chartered banks that decide to join.

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

B. 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 answer options are correct.

C. Nonmember banks did not have to hold non-interest bearing reserve deposits at the Fed.

Prior to 1980: a. member banks of the Federal Reserve did not have to hold non-interest-bearing reserve deposits at the Fed. b. nonmember banks had to hold non-interest-bearing reserve deposits at the Fed. c. nonmember banks did not have to hold non-interest-bearing reserve deposits at the Fed. d. all banks, member or not, had to hold reserve deposits at the Fed in a non-interest-bearing account.

C. Is where the Federal Reserve System's portfolio is managed.

The Federal Reserve Bank of New York is unique from other Reserve banks because it: a. is the only regional Bank that serves just one state. b. is the only regional Bank located in a financial center. c. is where the Federal Reserve System's portfolio is managed. d. is the oldest and therefore the largest.

D. 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.

C. 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.

A. 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.

B. 1913.

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

C. President of the United States.

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

D. The commercial banks in their districts.

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

A. 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.

C. New York City.

The largest of the regional 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.

D. Economic and political forces as well as population.

The lines drawn to establish Federal Reserve Districts were based on: 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 in 1914.

D. Twelve.

The number of regional Federal Reserve Banks is: a. nine. b. seven. c. five. d. twelve.

C. 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.

B. 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 Federal Reserve Banks.

A. Denver.

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

B. Philadelphia.

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

D. EXporter and importer interests are reflected.

Which of the following is a false statement about the structure of the Federal Reserve System? a. Banker and business interests are reflected b. State and regional interests are reflected c. Government (public) and private interests are reflected d. Exporter and importer interests are reflected