Chapter 16

The Fed's revenue comes: a. From internally generated funds from interest on securities it holds and fees charged to banks for payments system services. b. from the Department of Commerce c. Solely from taxes placed on member banks d. From Congressional appropriation.

From internally generated funds from interest on securities it holds and fees charged to banks for payments and system services.

The agreement to form a European monetary union was formalized in the Treaty of: a. Paris b. Amsterdam c. Milan d. Maastricht

Maastricht

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

Most elect not to join the system

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

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

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.

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

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

Only by the Reserve Bank in New York

The real power in the FOMC lies with a. The President of the New York Fed Bank b. No single individual; all participants have an equal share of the power c. The Chairman of the Board of Governors d. The System Open Market Manager

The Chairman of the Board of Governors.

Comparing the European and the U.S. central bank systems, the Governing Council of the European system resembles: a. The Board of Governors b. The FOMC c. The Presidents of the Regional Federal Reserve Banks d. The Chairman of the Board of Governors of the Fed

The FOMC

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

The Federal Deposit Insurance Corporation

Which of the books used at the FOMC meetings contains a discussion of financial markets and current policy options? a. The Beigebook b. Both the Beigebook and Greenbooks c. The Tealbook d. The Greenbook

The Tealbook

The interest rate that the FOMC currently chooses to control is: a. 30-year Treasury bond rate b. Federal funds rate c. Prime rate d. Discount rate.

The federal funds rate

To make sure the U.S. President cannot unduly influence the Board of Governors a. Only three governors can be replaced in any one year. b. the law prevents a president from appointing more than one governor c. the terms of the governor are 10 years long d. the terms of governors are staggered

The terms of the governors are staggered

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

Three branches with overlapping responsibilities.

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

Twelve

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

12

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

1913

Each president of a Reserve Bank serves for a: a. 2 year renewable term b. 5 year term c. 7 year term d. 14 year term

5 year term

The European Central Bank has ensured independence by appointing Executive Board members for a. 20 yeaar terms b. 14 year terms c. 8 year terms, non-renewable terms d. life

8 year non-renewable terms

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

All banks member or not

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

Altering the real interest rate when inflation is changing quickly.