Deck 17: Who's in Charge Here?

Question 1

Reserve requirements on bank deposits are set by

A) the SEC.
B) the Federal Reserve board of governors.
C) the Federal Reserve district banks.
D) Congress.

Answer 1

B

Question 2

Federal law required that no two Federal Reserve Board Governors come from the same

A) state.
B) political party.
C) industry.
D) Federal Reserve district.

Answer 2

D

Question 3

The Secretary of the Treasury

A) serves as Chairman of the Board of Governors.
B) serves as a member of the Board of Governors.
C) serves as a member of the Federal Open Market Committee.
D) does not serve on the Board of Governors.

Answer 3

D

Question 4

Funding for the operations of the Board of Governors of the Federal Reserve is derived from

A) taxes collected from commercial banks.
B) the governments of the states in which the district banks operate.
C) appropriations from the United States Congress.
D) earnings of the Federal Reserve district banks.

Question 5

The Chairman of the Federal Open Market Committee is also

A) Chairman of the Federal Deposit Insurance Corporation.
B) Chairman of the Federal Reserve Board of Governors.
C) Comptroller of the Currency.
D) President of the New York Federal Reserve Bank.

Question 6

Unless there are deaths or resignations, a two-term U.S. President can appoint up to

A) twelve members of the Federal Reserve Board of Governors.
B) eight members of the Federal Reserve Board of Governors.
C) four members of the Federal Reserve Board of Governors.
D) two members of the Federal Reserve Board of Governors.

Question 7

Which of the following is not a member of the Federal Open Market Committee (FOMC)?

A) The entire board of governors
B) Five reserve bank presidents
C) The chairman of the SEC
D) All of the above are members of the FOMC

Question 8

When the Federal Reserve System was created in 1913, it was designed to

A) play the role of a passive service agency.
B) stabilize the economy through the use of open market operations.
C) collect taxes for the federal government.
D) mint new gold and silver coins.

Question 9

The President of the United States appoints the

A) directors of the Federal Reserve regional banks.
B) presidents of the Federal Reserve regional banks.
C) Federal Advisory Council.
D) members of the Board of Governors of the Federal Reserve.

Question 10

The Federal Reserve's primary monetary policy-making body is the

A) Federal Open Market Committee.
B) Council of Economic Advisors.
C) Federal Advisory Council.
D) Federal Deposit Insurance Corporation.

Question 11

Which of the following positions is included on the Federal Open Market Committee?

A) Comptroller of the Currency
B) Chairman of the Council of Economic Advisors
C) Chairman of the Federal Reserve Board of Governors
D) Secretary of the Treasury

Question 12

To make sure that no one group could dominate the direction of monetary policy, the 1913 Federal Reserve Act diffused power in all of the following ways except

A) geographically.
B) between the public and private sectors.
C) internationally.
D) within the government.

Question 13

Members of the Board of Governors serve

A) fourteen year terms.
B) four-year terms.
C) at the discretion of the Federal Reserve Chairman.
D) at the discretion of the President of the United States.

Question 14

The principal policy-maker of the Federal Reserve is the

A) Chairman of the Federal Reserve Board of Governors.
B) president of the New York Federal Reserve bank.
C) president of the Washington, D.C. Federal Reserve bank.
D) Comptroller of the Currency.

Question 15

Which of the following was an objective of the framers of the Federal Reserve System?

A) Decentralized power
B) Executive branch power
C) Elimination of private-sector influence
D) Consolidation of the banking industry

Question 16

With respect to reserve requirements on bank deposits, the Board of Governors can set them

A) at any level the Board desires.
B) at any level approved by the Federal Open Market Committee.
C) within the bounds of the specific limits imposed by Congress.
D) within the bounds of the specific limits set by the Secretary of the Treasury.

Question 17

Each regional Federal Reserve Bank is owned by

A) the member banks in its district.
B) the Federal Deposit Insurance Corporation.
C) those who purchase its stock on the open market.
D) the taxpayers in its district.

Question 18

The Board of Governors appoint __________ directors for each Federal Reserve Bank and the member banks elect __________ for the Federal Reserve Bank in their district.

A) three; three
B) three; six
C) six; three
D) six; six

Question 19

The Federal Reserve Bank of New York

A) executes open market operations.
B) sets reserve requirements.
C) establishes the prime rate.
D) establishes the three-month Treasury bill rate.

Question 20

The Comptroller of the Currency

A) serves as Chairman of the Board of Governors.
B) serves as a member of the Board of Governors.
C) serves as an alternate member of the Board of Governors.
D) does not serve on the Board of Governors.

Question 21

Which of the following is not a permanent member of the FOMC?

A) The president of the New York Fed
B) The president of the Philadelphia Fed
C) The chairman of the board of governors
D) All of the above are permanent members of the FOMC.

Question 22

Supporters of Federal Reserve independence contend that independence from the rest of the federal government leads to lower

A) inflation rates.
B) interest rates.
C) reserve requirements.
D) rates of unemployment.

Question 23

Which of the following arguments is often used by opponents of Federal Reserve independence?

A) Independence slows the policy decision process.
B) Independence causes inflationary pressures to build because of excessive monetary growth.
C) Independence leads to conflicts between monetary and fiscal policy.
D) Independence causes a concentration of financial power.

Question 24

Which of the following groups within the Federal Reserve System is primarily concerned with open market operations?

A) The Federal Open Market Committee
B) The Federal Advisory Council
C) The Federal Reserve Bank presidents
D) The Board of Governors

Question 25

Which of the following is a permanent member of the Federal Open Market Committee?

A) President of the New York Federal Reserve Bank
B) President of the Washington, D.C. Federal Reserve Bank
C) Comptroller of the Currency
D) Secretary of the Treasury

Question 26

Voting members of the Federal Open Market Committee are

A) the Board of Governors, the presidents of five Federal Reserve Banks, and the Comptroller of the Currency.
B) the Board of Governors and presidents of five Federal Reserve Banks.
C) the Board of Governors and all twelve Federal Reserve Bank presidents.
D) the Board of Governors, all twelve Federal Reserve Bank presidents, and the Secretary of the Treasury.

Question 27

All twelve Federal Reserve Bank presidents

A) attend Federal Open Market Committee Meetings.
B) vote on decisions regarding the discount rate.
C) vote on decisions regarding the prime rate.
D) vote on decisions regarding bank reserve requirements.

Question 28

In terms of informal power within the Federal Reserve, which of the following groups do experts regard as the most powerful?

A) The Federal Advisory Council
B) The economic staff of the U.S. Department of Commerce
C) The economic staff of the Board of Governors
D) Federal Reserve Bank directors

Question 29

Congress created the Federal Reserve System in 1913 as the institution delegated to administer

A) monetary policy to stabilize the economy.
B) the constitutional power of Congress to "coin money and regulate the value thereof."
C) collect taxes for the federal government.
D) the minting of coins.

Question 30

Which of the following groups within the Federal Reserve System is primarily concerned with public relations?

A) The Federal Open Market Committee
B) The Federal Advisory Council
C) The Federal Reserve Bank presidents
D) The Board of Governors

Question 31

Which of the following is an accurate statement regarding the evolution of the Federal Reserve System?

A) The independence of the Federal Reserve has been systematically eroded by legislation.
B) The Federal Reserve has shifted from an agency controlled by the states to a federally controlled agency.
C) The Federal Reserve has shifted from a fiscal policy agency to a monetary policy agency.
D) The Federal Reserve has shifted from a regional service agency to a national policy-making institution.

Question 32

Federal Reserve Bank directors

A) have relatively little influence in monetary policy decisions.
B) determine bank reserve requirements.
C) determine bank capital requirements.
D) set the federal funds rate.

Question 33

In most countries the central bank is

A) totally autonomous from the rest of government.
B) semi-independent from the rest of the government.
C) a part of the private sector.
D) subordinate to the rest of government.

Question 34

Which of the following is considered by experts to have relatively little power within the Federal Reserve?

A) The Board of Governors
B) The president of the New York Federal Reserve Bank
C) The economic staff of the Board of Governors
D) The Federal Advisory Council

Question 35

The Federal Reserve is considered by experts to be a government agency that is

A) totally independent from the rest of the federal government.
B) semi-independent from the rest of the federal government.
C) closely tied to Congress.
D) subservient to the interests of large money-center banks.

Question 36

In which country is the central bank more independent than the Federal Reserve?

A) Germany
B) Japan
C) Great Britain
D) All of the above.

Question 37

If Congress passes legislation reducing Federal Reserve independence, financial market participants are likely to assume that

A) the money supply will decline.
B) inflation will increase.
C) recession will quickly follow.
D) the federal deficit will rise.

Question 38

Over the past seventy-five years, power within the Federal Reserve has shifted from

A) the Federal Reserve Banks to the Board of Governors in Washington.
B) the Board of Governors to the Federal Reserve Bank of New York.
C) domestic Federal Reserve banks to foreign Federal Reserve banks.
D) the Federal Reserve Bank of New York to the Federal Reserve Bank of Dallas.

Question 39

Discount rates are __________ every two weeks by the directors of each regional Federal Reserve Bank but are __________ by the Board of Governors.

A) determined; established
B) established; determined
C) recommended; established
D) determined; recommended

Question 40

Over time, overall responsibility for formulating monetary policy has become increasingly concentrated in the

A) Federal Reserve Bank of New York.
B) Council of Economic Advisors.
C) Federal Deposit Insurance Corporation.
D) Federal Reserve Board of Governors.