MID-TERM FINANCIAL INSTITUTIUON CH. 4
As of 2018, Greece owed the EU and IMF roughly _____. Multiple choice question. $200 billion $100 billion $530 billion $330 billion
330 BILLION
When the Federal Reserve implements monetary policy by targeting the money supply (currency and bank reserves), movement of the demand curve for money around a fixed supply curve causes interest rates to Multiple choice question. decrease. remain constant. increase. be volatile.
BE VOLATILE
The Federal Reserve serves as the __________ for the U.S. Treasury, holding the deposit accounts and collateral for government agencies. Multiple choice question. commercial bank investment bank underwriter financier
COMMERCIAL BANK
Federal Reserve Banks are responsible for the collection and replacement of _________ from circulation. Multiple choice question. currency expired commercial paper government securities bonds past their maturity date
CURRENCY
True or false: During the Financial Crisis, coordinated effort by the central banks of 11 major countries accounted for the bulk of the economic rescue programs. True false question. True False
FALSE
The ________ system is the wire transfer system operated by the Federal Reserve Bank for the secure transfer of government securities between investors. Multiple choice question. Tripwire ReserveNet Fedwire ACH
FEDWIRE
Which of the following are among the responsibilities of the Federal Reserve Banks? Multiple select question. Deliver municipal bonds for states Issue U.S. Treasury securities Deliver corporate bonds Issue commercial paper Deliver government securities to investors Issue and redeem U.S. savings bonds
Issue U.S. Treasury securities Deliver government securities to investors Issue and redeem U.S. savings bonds
The supervisory and regulatory activities of each Federal Reserve Bank in its district includes the authority to do which of the following? Multiple select question. Performs examinations and inspections Monitor the activities of insurance companies Approve expanded activities Charter new banks Issue warnings Excuse depository institutions from reserve requirements
Performs examinations and inspections Approve expanded activities Issue warnings
Members of the Federal Reserve Board are appointed by the President but must be confirmed by the Multiple choice question. Secretary of the Treasury. other board members. House of Representatives. Senate.
SENATE
The twelve members of the Federal Open Market Committee consist of which of the following? Multiple select question. The Secretary of the Treasury The presidents of the twelve Fed district banks The president of the New York Fed Four of the presidents of the twelve Fed districts The Vice President The seven members of the Board of Governors
The president of the New York Fed Four of the presidents of the twelve Fed districts The seven members of the Board of Governors
The Federal Reserve Trading Desk at the New York Fed implements the FOMC policy directive by buying or selling ________ on the over the counter market. Multiple choice question. U.S. Treasury securities government agency bonds municipal bonds commercial paper
U.S. Treasury securities
Four of the programs implemented by central banks to alleviate the effects of the Financial Crises were Multiple select question. asset purchases or guarantees. the expansion of retail deposit insurance. tight control of the level of imports using tariffs and quotas. capital injections into the banking system. debt guarantees. the lowering of exchange rates to stimulate trade.
asset purchases or guarantees. the expansion of retail deposit insurance. capital injections into the banking system. debt guarantees.
One of the problems with using the discount rate as a monetary policy tool is that it is difficult to predict ________ when the discount rate changes. Multiple choice question. changes in long-term interest rates changes in the U.S. dollar exchange rate changes in inflation changes in discount window borrowing
changes in discount window borrowing
The "money base" consists of ________ plus ________. Multiple choice question. reserves; repurchase agreements Reason: currency in circulation; reserves currency in circulation; reserves vault cash; reserves Reason: currency in circulation; reserves cash; coins Reason: currency in circulation; reserves
currency in circulation; reserves
The two largest liabilities on the Federal Reserve balance sheet are ________ and ________. Multiple choice question. currency in circulation; reserves currency in circulation; repurchase agreements vault cash; repurchase agreements repurchase agreements; reserves
currency in circulation; reserves
Lowering domestic interest rates can cause the dollar's foreign exchange rate to ________, resulting in a(n) ________ in U.S. exports. decrease; increase increase; increase increase; decrease
decrease; increase
On the Fed balance sheet, reserves consist of ___________ and ___________. Multiple choice question. depository institution reserves; vault cash Vault cash; coins
depository institution reserves; vault cash
Each of the twelve Federal Reserve Banks sets and changes the ________ that they charge on loans to financial institutions in their district. Multiple choice question. discount rate coupon rate federal funds rate origination fees
discount rate
Each Federal Reserve Bank's ________ makes cash loans to financial institutions by discounting eligible short-term securities at the official ________. discount window; discount rate loan department; coupon rate discount window; federal funds rate
discount window; discount rate
The Federal Reserve Bank uses its tools to influence either the demand for or supply of _________ at depository institutions. Multiple choice question. savings accounts required reserves bank loans excess reserves
excess reserves
The three tools that the Federal Reserve Bank can use to implement monetary policy are Multiple select question. executing open market operations. adjusting bank reserve requirements. printing more money. direct manipulation of foreign exchange rates. adjusting the discount rate. forward guidance.
executing open market operations. adjusting bank reserve requirements. adjusting the discount rate.
Federal Reserve Board members serve a _______ year nonrenewable term. Multiple choice question. 14 10 12
fourteen
When the Federal Reserve buys U.S. Treasury securities from the over-the-counter market, it _______ the supply of excess reserves and places _______ pressure on the federal funds rate. increases; upward decreases; downward decreases; upward increases; downward
increases; downward
When the Federal Reserve want to stimulate the economy, it can
lower the discount rate. use open market operations to buy Treasury bills. lower reserve requirements
When the Federal Reserve want to stimulate the economy, it can Multiple select question. increase reserve requirements. raise the discount rate. lower the discount rate. use open market operations to sell Treasury bills. lower reserve requirements. use open market operations to buy Treasury bills.
lower the discount rate. lower reserve requirements. use open market operations to buy Treasury bills.
Changes in the excess reserves held by depository institutions directly influences the _______ and the _______. Multiple choice question. level of required reserves; level of exports money supply; interest rates U.S. dollar exchange rate; number of bank branches money supply; level of imports
money supply; interest rates
The repeated issuing of new loans and creation of new deposits triggered by a change in the reserve requirement results in a total change in bank deposits that is many times different than the original change in reserves. This is called the Multiple choice question. bernoulli effect. venturi effect. placebo effect. multiplier effect.
multiplier effect.
The purchase and sale of U.S. government securities by the trading desk at the New York Fed under the direction of the FOMC is called Multiple choice question. arbitrage. Reason: open market operations. proprietary trading. Reason: open market operations. open market operations. market making. Reason: open market operations.
open market operations.
Of the three monetary policy tools the Federal Reserve has at their disposal, only ________ and _________ work by changing the level of bank deposits and thus the money supply. Multiple choice question.
open market operations; reserve requirement changes changing the discount rate; open market operations open market operations; reserve requirement changes
Once the FOMC has determined a target monetary aggregate or interest rate level, it communicates a(n) ______ to the Federal Reserve Bank of New York. Multiple choice question. memo of understanding phone call memo policy directive
policy directive
he main responsibilities of the FOMC are to formulate policies to Multiple select question. increase the value of the US dollar. maximize the value of the US stock market. promote full employment. promote economic growth. promote price stability. maintain a sustainable pattern of international trade.
promote full employment. promote economic growth. promote price stability. maintain a sustainable pattern of international trade.
One important way in which the Federal Reserve Banks provide assistance in the conduct of monetary policy is by providing five Federal Reserve Bank presidents to serve on the FOMC board members. buying and selling US treasury securities from the FOMC. setting the federal funds rate for their individual districts.
providing five Federal Reserve Bank presidents to serve on the FOMC board members.
Each Federal Reserve Bank has supervisory and regulatory authority over the activities of ___________ and ___________ located in their districts. commercial banks; insurance companies bank holding companies; finance companies state-chartered member banks; credit unions
state-chartered member banks; bank holding companies
When the Federal Reserve implements monetary policy by targeting the money supply (currency and bank reserves), it fixes the ________ while letting the ________ fluctuate. Multiple choice question. supply curve; demand curve interest rate; money supply interest rate; exchange rate demand curve; supply curve
supply curve; demand curve
The chair of the Federal Open Market Committee is Multiple choice question. rotated among the twelve Fed district presidents. Reason: the chair of the Board of Governors. the president of the New York Fed. Reason: the chair of the Board of Governors. the Secretary of the Treasury. Reason: the chair of the Board of Governors. the chair of the Board of Governors.
the chair of the Board of Governors.
The chair of the Federal Open Market Committee is Multiple choice question. the Secretary of the Treasury. rotated among the twelve Fed district presidents. the president of the New York Fed. the chair of the Board of Governors.
the chair of the Board of Governors.
The four major functions of the Federal Reserve Bank are to supervise and regulate depository institutions. provide payment and other financial services. manage the value of the US dollar. collect tariffs and taxes on foreign imports. conduct monetary policy. manage the stability of the financial system.
upervise and regulate depository institutions. provide payment and other financial services. conduct monetary policy. manage the stability of the financial system.