M&B - CH. 16, TEST 1
40 Which one of the following is (are) not a permanent voting member(s) on the FOMC? A) the seven Governors of the Fed B) the Secretary of the Treasury C) the President of the Federal Reserve Bank of New York D) the chair of the Board of Governors
B
A large step toward independence occurred for the Fed in 1935 when the A) Fed went from two to twelve districts. B) Secretary of the Treasury and the Comptroller of the Currency were removed from the Board of Governors. C) Chairman of the Board of Governors was no longer a cabinet position. D) Fed was given the ability to control its own budget.
B
Considering the Federal Reserve Districts, which one 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.
B
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) selling any Treasury securities the public did not purchase. D) curtailing credit and keeping bond prices high.
B
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
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
How many members belong to the board of directors for each of the Reserve Banks of the Fed? A) 7 B) 9 C) 12 D) 14
B
In its role as bank for the U.S. government, the Federal Reserve performs all of the following services except which one? A) issuing new currency B) making discount loans C) maintaining the U.S. Treasury's bank account D) managing U.S. Treasury borrowings
B
One reason it took so long to have a central bank in the United States is that A) it was not needed. B) states feared centralization of power. C) state currencies worked fine. D) the primarily agrarian economy made it difficult for financial difficulties to become widespread.
B
The Chairman of the Board of Governors A) serves a four-year term that cannot be renewed. B) is appointed by the U.S. President, selected from the Board of Governors. C) serves the same four-year term as the U.S. President. D) serves an eight-year term.
B
The FOMC controls the real interest rate A) if inflation changes quickly. B) if inflation doesn't change quickly. C) only if it adjusts the federal funds rate to match the changes in the rate of inflation. D) only on an annual basis.
B
The Federal Reserve was created in A) 1929. B) 1913. C) 1909. D) 1945.
B
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 A) Bluebook only. B) Beigebook only. C) Bluebook and Greenbook, but not the Tealbook. D) Beigebook and Bluebook but not the Greenbook.
B
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) the current rate less the expected rate of inflation.
B
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 excess reserves held 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.
B
The objectives set for the Fed by Congress are A) very specific, which adds to the Fed's accountability. B) by design, quite vague, allowing the Fed to really set its own 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.
B
The three branches of the Federal Reserve System include each of the following, except which one? A) the Board of Governors. B) the Federal Deposit Insurance Corporation. C) the Federal Open Market Committee. D) the twelve regional Federal Reserve Banks.
B
Which of the books used at the FOMC meetings contains anecdotal information collected by the Federal Reserve Banks? A) the Bluebook B) the Beigebook C) the Tealbook D) both the Beigebook and Bluebook
B
Which one 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
B
62) The Fed's revenue comes A) from congressional appropriation. B) from the Department of Commerce. C) from internally generated funds from interest on securities it holds and fees charged to banks for payments system services. D) solely from taxes placed on member banks.
C
A typical FOMC meeting would best be described as A) an informal meeting with significant give and take among participants. B) an informal meeting with the Chairman as a passive observer. C) a fairly formal session with not much give and take. D) a press conference, where the financial press can ask questions regarding the Fed's view of the economy.
C
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
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
C
In its role as the bankers' bank, the Federal Reserve performs all of the following services except which one? 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
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.
C
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.
C
Once the FOMC announces the result of its meeting, the attendees A) must brief the financial news immediately after and answer questions posed to them. B) observe a 24-hour blackout period following the meeting during which they do not speak publicly about the economic outlook or current monetary policy. C) 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. D) never discuss the policy issues addressed in the meetings.
C
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 non-interest-bearing reserve deposits at the Fed.
C
The Chairman of the FOMC is the A) Secretary of the Treasury. B) Vice Chairman of the Board of Governors. C) Chairman of the Board of Governors. D) President of the New York Fed.
C
The Fed's independence can only be revoked by A) the U.S. President. B) the Secretary of the Treasury. C) Congress. D) changing the U.S. Constitution.
C
The Federal Reserve Bank of New York is unique from other Reserve banks because it is A) the only regional Bank that serves just one state. B) the only regional Bank located in a financial center. C) where the Federal Reserve System's portfolio is managed. D) the oldest and therefore the largest.
C
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.
C
The Federal Reserve's Open Market Committee currently meets A) monthly. B) biweekly. C) eight times a year. D) once every quarter, unless a crisis warrants more frequent meetings.
C
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.
C
The interest rate changes that result from the FOMC meetings can only be altered by A) Congress. B) the Secretary of the Treasury during an economic crisis. C) the FOMC. D) by the U.S. President during a time of crisis.
C
The primary purpose of meetings of the FOMC is to A) set the required reserve rate. B) set the discount rate. C) decide on how to influence financial conditions. D) set the prime rate.
C
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) no single individual; all participants have an equal share of the power.
C
The services that 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 any of the Reserve Banks. C) only by the Reserve Bank in New York. D) only by the Reserve Bank in San Francisco.
C
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 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.
D
One valuable lesson investors should learn from the stock market behavior during the late 1990s and early 2000s is that the Fed A) can control the stock market. B) can reduce the idiosyncratic risk of investing but not the systematic risk. C) can eliminate the risk from investing. D) cannot prevent a stock market decline.
D
Prior to the creation of the Federal Reserve System in the United States, how did financial panics typically begin? A) shortage of gold B) stock market crash C) bank run on an urban bank D) crop failure or a bumper crop that drove the market price down
D
The Board of Governors of the Fed performs each of the following functions except which one? A) analyzing financial and economic conditions B) setting the reserve requirement C) approving bank merger applications D) making discount loans
D
The Federal Open Market Committee began operating in A) 1913. B) 1929. C) 1914. D) 1936.
D
The Federal Reserve Act explicitly requires that the Board of Governors represents each of the following except which one? A) commercial interests B) foreign interests C) financial interests D) agricultural interests
D
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.
D
The information contained in the Fed's Tealbook 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) the material in the teal book is never released to the public. D) five years after the FOMC meeting in which it is used.
D
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.
D
The lines drawn to establish Federal Reserve Districts were based A) solely on population distribution in 1914. B) solely on economic forces that existed in 1914. C) on economic and political forces that existed in 1914. D) on economic and political forces as well as population distribution in 1914.
D
The number of regional Federal Reserve Banks is A) nine. B) seven. C) five. D) twelve.
D
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) instructs the staff of the New York Fed on how to manage the Fed's balance sheet.
D
Which one 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.
D
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 with over $100 million in assets. D) only nationally chartered banks.
A
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.
A
Each of the following is a monetary policy action conducted by any of the regional Federal Reserve banks except which action? A) conducting open market operations from their banks B) participating in FOMC meetings C) participating in setting the discount rate D) making discount loans
A
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 nonrenewable, 14-year term. D) are appointed for life, though they can resign at any time.
A
Once the FOMC meetings adjourn, the public is made aware of the FOMC's decision A) immediately after the meeting. B) 48 hours after the meeting adjourns. C) within five business days. D) 24 hours after the meeting adjourns.
A
The interest rate that the FOMC currently chooses to control is the A) federal funds rate. B) 30-year Treasury bond rate. C) discount rate. D) prime rate.
A
The largest Federal Reserve District geographically is serviced by the Reserve Bank in A) San Francisco. B) Chicago. C) New York. D) the city closest to the depositor.
A
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 ten years long. D) only three governors can be replaced in any one year.
A
Which one of the following cities does not have a Federal Reserve Bank located in it? A) Denver B) Atlanta C) San Francisco D) Chicago
A
