M&B Ch 16

The Board of Governors at the Federal Reserve is an important component of the Federal Reserve System. Its web address contains the suffix in the top domain _____.

.gov

How many voting members are there in the Federal Open Market Committee (FOMC)?

12

Which of the following constitutes the Fed (=Federal Reserve System)?

A) The Board of Governors B) The 12 regional Federal Reserve Banks C) The Federal Open Market Committee D) All of the above E) Only (a) and (c) of the above D

The full term of the Board of Governors is _____ and lasts _____.

A) non-renewable; 4 years B) renewable; 14 years C) non-renewable; 20 years D) non-renewable; 14 years E) renewable; without time limit D

There are ___ members of the Board of Governors whose terms are ______.

A) seven; renewable B) twelve; non-renewable C) seven; non-renewable D) five; non-renewable E) five; renewable C

Which of the following are NOT funded by the Congress's Appropriation Process?

The regional Federal Reserve Banks

Which of the following cities do NOT have a regional Federal Reserve Bank?

Washington D.C.

The Federal Reserve System (Fed) must be independent from all political influences because ________.

a) An important policy such as monetary policy must be controlled by an exclusive group of elites b) debt monetizing should never occur c) The monetary policy makers at the Fed must be allowed to have a long-term view d) all of the above e) only (b) and (c) of the above E

The Federal Reserve System (Fed) must be independent from all political influences because ________.

a) An important policy such as monetary policy must be controlled by an exclusive group of elites b) the Congress and the President can do a better job of managing economic growth. c) The monetary policy makers at the Fed must be allowed to have a long-term view d) all of the above e) only (a) and (b) of the above C

In which of the following cities, is a regional Federal Reserve Bank located?

a) Chicago b) New York c) Los Angeles d) all of the above e) only (a) and (b) of the above E

Which of the following ensures the independence of the Federal Reserve System from political influences?

a) Members of the Board of Governors have a non-renewable 14-year term b) The Federal Reserve Banks guarantee their employees permanent job c) The headquarters of the Fed's Board of Governors is located in Washington, D.C. d) all of the above ensures the Fed's independence e) Only (a) and (b) of the above A

The National Banking Act was passed before ________.

a) The State Banking Act b) The Wildcat Banking Act c) The Federal Reserve Act d) The Bank of the United States Act C

Which of the following is the largest source of income to the Federal Reserve System (Fed)?

a) The fee income from check-clearing and wire-transfer services. b) The interest earned on the U.S. Treasury securities bought and held at the Fed c) The fee income from granting bank charters d) all of the above e) only (a) and (c) of the above B

Which of the following is a source of income to the Federal Reserve System (Fed)?

a) The interest received from the U.S. Treasury securities bought and held at the Fed b) The interest income from the discount loans c) The collection of taxes from member banks d) all of the above e) only (a) and (b) of the above E

Which of the following does not ensure the independence of the Federal Reserve System (Fed) from political influences?

a) The position of the Chairperson of the Board of Governors has a 4-year renewable term. b) The Fed is not subject to audit for its monetary policy actions c) The Fed earns its own income. d) all of the above ensures the Fed's independence e) Only (a) and (c) of the above A

Which of the following does not ensure the independence of the Federal Reserve System (Fed) from political influences?

a) The position of the Chairperson of the Board of Governors has a 4-year renewable term. b) The Fed is subject to the Congressional hearings under the Humphrey-Hawkins Act c) The Fed has to recieve its annual budget from the Congress. d) all of the above do not ensure the Fed's independence e) Only (a) and (b) of the above E

The voting members of the Federal Open Market Committee (FOMC) include ______.

a) The vice chairperson of the Federal Reserve Board b) the president of the New York Federal Reserve Bank c) a few president of the regional Federal Reserve Banks d) all of the above e) only (a) and (c) of the above D

In which of the following cities is a regional Federal Reserve Bank located?

a) Washington, D.C. b) St. Louis, Missouri c) Kansas City, Kansas d) all of the above e) only (b) and (c) of the above E

The Bank of International Settlement (BIS) is _______.

a) an organization of central banks in the world b) an international bank that engages in commercial and investment banking c) owned by a small group of advanced nations d) all of the above e) only (a) and (b) of the above A

When the Federal Reserve System wants to increase liquidity in the economy, it can _______.

a) buy the U.S. Treasury securities from banks b) sell the U.S. Treasury securities to banks c) lower the required reserves at the banks d) all of the above e) only (a) and (c) of the above E

When the Federal Reserve System wants to increase money supply in the economy, it can _______.

a) buy the U.S. Treasury securities from banks b) sell the U.S. Treasury securities to banks c) lower the required reserves at the banks d) all of the above e) only (a) and (c) of the above E

The Federal Open Market Operations involve _______.

a) buying the U.S. Treasury securities b) selling the U.S. Treasury securities c) buying the U.S. junk bonds d) only (a) and (b) of the above e) only (a) and (c) of the above D

Which of the following functions does each of the 12 regional Federal Reserve Banks play?

a) clear checks b) destroy worn-out, damaged money c) issue new currency d) all of the above e) only (b) and (c) of the above D

The Federal Reserve System (Fed) has been making profits of ________ in recent years.

a) closer to $10 billion b) closer to $100 billion c) closer to $50 billion d) closer to $1 billion e) closer to $100 million B

When the Federal Reserve System sells the U.S. Treasury securities to banks, this will ______ money supply and thus, will result in ______ interest rates.

a) decrease; higher b) decrease; lower c) increase; higher d) increase; lower A

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.

a) decrease; lower b) decrease; higher c) increase; lower d) increase; higher B

When the Federal Reserve Banks make discount loans liberally to banks, this will tend to ______ money supply and thus, will result in ______ interest rates.

a) decrease; lower b) increase; higher c) increase; lower d) decrease; higher C

Which of the following functions does each of the 12 regional Federal Reserve Banks play?

a) establish the discount rate b) approve the discount loan c) clear checks d) all of the above e) only (a) and (b) of the above D

Which of the following functions does each of the 12 regional Federal Reserve Banks play?

a) examine bank holding companies b) collect data on local business conditions c) conduct research on economic affairs d) all of the above e) only (b) and (c) of the above D

Each member of the Board of Governors at the Fed ________.

a) is obligated to serve his/her full term out b) can quit any time before his/her term expires c) can vote who the next Fed Chairperson should be d) can extend his/her stay at the Fed at will e) only (a) and (c) of the above E

The Bank of International Settlement (BIS) is _______.

a) located in New York b) an international bank that engages in commercial and investment banking c) well known for settling disputes among banks d) all of the above e) none of the above E

The Federal Reserve Banking System was created as the _____ in the U.S.

a) none of the above b) central bank c) commercial bank d) investment bank e) public bank B

Which of the following is a monetary policy tool used by the Fed?

a) the open market operations b) the discount rate and discount loan policy c) the reserve requirements d) all of the above e) only (a) and (c) of the above D

Which of the following is a monetary policy tool used by the Fed?

a) the open market operations b) the prudent supervision of large banks c) the minimum capital requirements d) all of the above e) only (a) and (c) of the above A

According to Professor Choi, the U.S. uses the _________ as the main tool for implementing monetary policy.

a) open market operations b) reserve requirements c) discount loans d) all of the above equally A

If you want to decrease interest rates, you would instruct the Federal Open Market Operations to _______ the U.S. Treasury securities.

buy

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

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

If you want to increase interest rates, you would instruct the Federal Open Market Operations to _______ the U.S. Treasury securities.

sell

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