Ch 16 Econ 490
The federal funds rate is the interest rate:
Banks charge each other for overnight loans on their excess deposits at the Fed
A national central bank of a country that belongs to the European Union but does not participate in the monetary union would:
Be included in the European System of Central Banks but not in the European Central Bank
The attendees at the FOMC meetings receive information prior to the meetings that is contained in books with colorful names. The information that is released to the public prior to the meetings is from the:
Beige book only
Which of the following is responsible for invoking the Fed's emergency powers?
Board of governors
The objectives set for the Fed by Congress are:
By design, quite vague, allowing the Fed to really set its own goals
Criteria used to judge a central bank's independence include each of the following, except:
Cabinet or ministry level of authority
The method used by the ECB to measure inflation for meeting its objectives:
Can result in a contractionary monetary policy being used in a country where inflation is already very low
The interest rate changes that result from the FOMC meetings:
Cannot be changed by anyone other than the FOMC
One valuable lesson investors should learn from the stock market behavior during the late 1990s and early 2000s is that the Fed:
Cannot prevent a stock market decline
As a result of the 2007-2009 financial crisis, which of the following has been proposed as a change to the Federal Reserve?
Changing the appointment process for Reserve Bank Presidents
The Federal Reserve banks play a role in formulating monetary policy by each of the following, except:
Conducting open market operations from their banks
Which of the following statements best completes the following: "The Fed's independence can only be revoked by ¼"?
Congress
The primary purpose of meetings of the FOMC is to:
Decide on the target interest rate
Which of the following cities does not have a Federal Reserve Bank located in it?
Denver
The lines drawn to establish Federal Reserve Districts were based on
Economic and political forces as well as population distribution in 1914
The Federal Reserve's Open Market Committee currently meets:
Eight times a year
The European Central Bank has ensured independence by appointing Executive Board members for:
Eight-year non-renewable terms
The European Central Bank has ensured independence by
Explicitly forbidding the Governing Council from taking instructions from any government
Which of the following is a false statement about the structure of the Federal Reserve System?
Exporter and importer interests are reflected
Based on the membership of the Euro system in 2007, the median country is likely to be:
Fairly small
The information contained in the Fed's blue and green books is released to the public:
Five years after the FOMC meeting in which they are used
Each president of a Reserve Bank serves for a:
Five-year term
The Federal Reserve Act explicitly requires that the Board of Governors represents each of the following, except:
Foreign interests
The Governors of the Federal Reserve System serve terms of
Fourteen years
The Fed's revenue comes:
From internally generated funds from interest on securities it holds and fees charged to banks for payments system services
The FOMC controls the real interest rate:
If inflation doesn't change quickly
Once the FOMC meetings adjourn, the public is made aware of the FOMC's decision:
Immediately after the meeting
Now that Ireland is a member of the Euro system it is likely to find that the monetary policy that affects it:
Is likely to tolerate a higher level of inflation in Ireland than in other Euro system countries
The Chairman of the Board of Governors:
Is selected from the Board of Governors, appointed by the U.S. President
The Federal Reserve Bank of New York is unique from other Reserve banks because it:
Is where the Federal Reserve System's portfolio is managed
During World War II, the Fed accommodated the war effort by:
Keeping bond prices high and interest rates low
The Agreement to form a European monetary union was formalized in the Treaty of:
Maastricht
In its role as bank for the U.S. government, the Federal Reserve performs all of the following services, except:
Making discount loans
The Board of Governors of the Fed performs each of the following functions, except:
Making discount loans
In its role as the bankers' bank, the Federal Reserve performs all of the following services, except:
Managing U.S. Treasury borrowings
Comparing the FOMC and the ECB's Governing Council:
Member countries in the ECB must meet rigid fiscal requirements
Considering state chartered banks
Most elect not to join the system
Member banks of the Federal Reserve System include:
Nationally chartered banks and state chartered banks that decide to join
The largest of the regional Federal Reserve Banks is located in:
New York City
Considering the Federal Reserve Districts which of the following is true?
No district coincides with a single state
Current law regarding the Fed's Board of Governors stipulates that:
No more than one governor can come from the same district
Prior to 1980:
Nonmember banks did not have to hold non-interest-bearing reserve deposits at the Fed
In the meetings of the Governing Council of the European Central Bank, formal votes are:
Not taken, since formal voting could get in the way of good policy
Once the FOMC announces the result of its meeting the attendees:
Observe a blackout period that lasts for a week following the meeting during which they do not speak publicly about the economic outlook or current monetary policy
The services the Federal Reserve provides to foreign central banks and other international organizations are handled:
Only by the Reserve Bank in New York
Buying and selling U.S. Treasury Securities for the Fed's own portfolio is called:
Open market operations
Which of the following cities has a Federal Reserve Bank located in it?
Philadelphia
The Governors of the Federal Reserve System are appointed by the:
President of the United States
Most of the Fed's income is:
Returned to the U.S. Treasury
The Federal Reserve District that covers the largest geographic area is serviced by the Bank located in:
San Francisco
A large step toward independence occurred for the Fed in 1935 when the:
Secretary of the Treasury and the Comptroller of the Currency were removed from the Board of Governors
Members of the Board of Governors of the Fed:
Serve one non-renewable fourteen-year term
Member countries of the Euro system agree to:
Share a common monetary policy and use the euro as their currency
The policy directive that is produced from the FOMC meeting:
Simply instructs the staff of the New York Fed to buy and sell securities to maintain the market federal funds rate at the target rate
One reason it took so long to have a central bank in the United States is that:
States feared centralization or power
Which of the books used at the FOMC meetings contains anecdotal information collected by the Federal Reserve Banks?
The Beige book
Comparing the European and the U.S. central bank systems, the Executive Board of the European system resembles:
The Board of Governors
The Chairman of the FOMC is
The Chairman of the Board of Governors
The real power in the FOMC lies with:
The Chairman of the Board of Governors
As a means to make sure the U.S. President cannot unduly influence the Chairman of the Board of Governors:
The Chairman's term does not coincide with the Presidential term
Which statement best completes the following sentence; "The U.S. dollar is to the fifty states as the euro is to¼."?
The Euro system
Comparing the European and the U.S. central bank systems, the Governing Council of the European system resembles:
The FOMC
The three branches of the Federal Reserve System include each of the following, except:
The Federal Deposit Insurance Corporation
The largest Federal Reserve District geographically is serviced by:
The Reserve Bank in San Francisco
Which of the following is (are) not a permanent voting member(s) on the FOMC?
The Secretary of the Treasury
To ensure that the Board of Governors is not unduly influenced by any one President:
The appointees to the Board are subject to U.S. Senate confirmation
Which of the books used at the FOMC meetings can be characterized as less quantitative than the other two?
The beige book
Which of the books used at the FOMC meetings contains a discussion of financial markets and current policy options?
The blue 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?
The blue book and the green book
The Reserve Banks of the Federal Reserve System are owned by:
The commercial banks in their districts
The interest rate that the FOMC currently chooses to control is:
The federal funds rate
Which of the books used at the FOMC meetings the Board staff's economic forecast for the next few years?
The green book
One key difference concerning the communications from the Fed's FOMC and the European Systems Governing Council is:
The president and vice-president of the Governing Council hold a news conference after their regular monthly meetings; the leaders of the FOMC hold no such conference
Comparing the European and the U.S. central bank systems, the National Central Banks that make up part of the European System of Central Banks resembles:
The regional Federal Reserve Banks
To make sure the U.S. President cannot unduly influence the Board of Governors:
The terms of the governors are staggered
The likelihood that the Fed will implement a change that will seriously harm the economy is minimized by the fact that
There is decision making by committee
By 2007, the euro had become the currency of:
Thirteen countries in Europe
The Federal Reserve System is composed of:
Three branches with overlapping responsibilities
The number of regional Federal Reserve Banks is:
12
The number of voting members on the Federal Open Market Committee is:
12
As of 2010, the euro had become the currency for:
16 countries
The Federal Reserve was created in:
1913
The Federal Open Market Committee began operating in:
1936
The Treaty of Maastricht was signed in:
1992
How many members are on the Board of Governors of the Federal Reserve System?
7
How many members belong to the board of directors for each of the Reserve Banks of the Fed?
9
Executive board members of the European System of Central Banks are appointed by:
A committee made up of heads of state of member countries
The members of the Board of Governors in recent years have been all of the following, except:
A current Secretary of the Treasury
A typical FOMC meeting would best be described as
A fairly formal session with not much give and take
Great Britain is:
A member of the European Union but not a member of the Euro system
The federal funds rate is stated as:
A nominal interest rate
Currently the requirement of holding a non-interest-bearing reserve account at the Fed must be met by:
All banks member or not
France, Germany, and Italy are:
All members of the European Union and the Euro system
The make-up of the Governing Council of the European Central Bank and the methods used to calculate price stability for the monetary system can potentially result in:
All of these are possible A. Small countries having undue influence on the decisions of the Council B. Monetary policy that is well suited for some countries but ill suited for others C. A policy for the median country rather than a policy well suited for any country
Changes in the federal funds rate influence the economy's growth rate through all of the following except by:
Altering the real interest rate when inflation is changing quickly
The ECB's Governing Council has price stability as a primary objective. It has defined price stability as:
An inflation rate close to two percent
Each of the Reserve Banks has a president who is:
Appointed by the bank's board of directors but approved by the board of governors
