Question 1

The Board of Governors of the Federal Reserve establishes monetary policy by:
A)setting reserve requirements, altering the prime rate, and through federal open market operations.
B)setting reserve requirements, altering the discount rate, and through federal open market operations.
C)setting reserve requirements, altering the discount rate, and through international currency transactions.
D)setting bank profitability ratios, altering the discount rate, and through federal open market operations.
E)none of the above

Accepted Answer

The Board of Governors of the Federal Reserve establishes monetary policy by setting reserve requirements, altering the discount rate, and through federal open market operations. The prime rate and international currency transactions are not directly controlled by the Federal Reserve. Bank profitability ratios are not a tool used by the Federal Reserve to establish monetary policy.

Question 2

__________ directors of the Federal Reserve are appointed by the Board of Governors of the Federal Reserve System and may not be stockholders, directors, or employees of existing banks.
A)Class A
B)Class B
C)Class C
D)Class D

Accepted Answer

Class C directors of the Federal Reserve are appointed by the Board of Governors and are not allowed to have any affiliation with existing banks. Class A and Class B directors, on the other hand, are appointed by member banks and have certain qualifications and affiliations with those banks. Class D directors are appointed by the Board of Governors and are chosen to represent the public.

Question 3

In response to the 2007 - 2009 financial crisis, the Fed's prime credit rate, which was 6.25 percent at the end of 2006, was lowered to _____ percent by the end of 2008 and was maintained at that level through 2009. Too specific
A)0.0
B)0.5
C)1.0
D)1.5
E)none of the above

Accepted Answer

The answer of In response to the 2007 - 2009...

Question 4

Although it enjoys substantial independence in its operations, the appointive power of the president and the ability of Congress to alter its structure make the ______________ a dependent political structure and one of the most powerful monetary organizations in the world.
A)Presidential Appointment Board (PAB)
B)Board of Directors (BOD)
C)Governing Body (GOB)
D)Financial Governors (FOG)
E)none of the above

Accepted Answer

The description fits the Federal Reserve, which is not listed among the options. The Federal Reserve is a powerful monetary organization with substantial independence, but its leadership is appointed by the President and its structure can be altered by Congress.

Question 5

Which of the following is a method by which the Federal Reserve establishes monetary policy?
A)setting reserve requirements,
B)altering the discount rate,
C)through federal open market operations,
D)all of the above methods are used.
E)none of the above

Accepted Answer

The Federal Reserve uses all of the above methods to establish monetary policy. Setting reserve requirements, altering the discount rate, and federal open market operations are all tools that the Federal Reserve uses to influence the money supply and regulate the economy.

Question 6

Currently, the Chairman of the Federal Reserve is ________________________.
A)Paul Volker
B)Alan Greenspan
C)Ben Bernanke
D)None of the above

Accepted Answer

As of 2021, Ben Bernanke is no longer the Chairman of the Federal Reserve. However, at the time of writing this question, he was the Chairman. Choice A and B are both incorrect as Paul Volker and Alan Greenspan have both served as Chairman of the Federal Reserve in the past. Therefore, the best answer is C) Ben Bernanke.

Question 7

The Board of Governors of the Federal Reserve establishes monetary policy by:
A)setting reserve requirements, altering the prime rate, and through federal open market operations.
B)setting loan to value ratios, altering the discount rate, and through federal open market operations.
C)setting reserve requirements, altering the discount rate, and through international currency transactions.
D)setting bank profitability ratios, altering the discount rate, and through federal open market operations.
E)none of the above

Accepted Answer

The Federal Reserve establishes monetary policy primarily through setting reserve requirements, altering the discount rate, and conducting federal open market operations. None of the options correctly list all three tools.

Question 8

The five components of the Federal Reserve System include:
A)Member banks, Federal Reserve District Banks, Board of Governors, Federal Open Market Committee, Adlib Monetary Committees.
B)Nonmember banks, Federal Reserve District Banks, Board of Governors, Federal Open Market Committee, Advisory committees.
C)Member banks, Federal Reserve District Banks, Board of Presidents, Federal Open Market Committee, Advisory committees.
D)Member banks, Federal Reserve District Banks, Board of Governors, Federal Closed Market Committee, Advisory committees.
E)none of the above

Accepted Answer

The answer of The five components of the Federal Reserve...

Question 9

The Board of Governors publishes ________________, which carries articles of current interest and offers a convenient source of the statistics compiled by the Fed.
A)the Federal Reserve Magazine
B)the Federal Reserve Weekly
C)the Federal Reserve Journal
D)the Federal Reserve News
E)none of the above

Accepted Answer

The Board of Governors publishes the "Federal Reserve Bulletin," not any of the options listed.

Question 10

Which of the following is not a method by which the Federal Reserve establishes monetary policy?
A)setting reserve requirements,
B)altering the discount rate,
C)through federal open market operations,
D)setting bank profitability ratios,
E)none of the above

Accepted Answer

Setting bank profitability ratios is not a method by which the Federal Reserve establishes monetary policy. The other options listed are all tools used by the Federal Reserve to influence the money supply and interest rates in the economy.

Question 11

____________________________ sets up a procedure for the prompt correction of errors on a revolving charge account and prevents damage to credit ratings while a dispute is being settled.
A)Truth in Lending Act
B)Equal Credit Opportunity Act
C)Federal Trade Commission Improvement Act
D)Fair Credit Billing Act

Accepted Answer

The Fair Credit Billing Act sets up a procedure for the prompt correction of errors on a revolving charge account and prevents damage to credit ratings while a dispute is being settled.

Question 12

____________________________ authorizes the Federal Reserve Board to identify unfair or deceptive acts or practices on the part of banks and to issue regulations to prohibit them.
A)Truth in Lending Act
B)Equal Credit Opportunity Act
C)Federal Trade Commission Improvement Act
D)Fair Credit Billing Act

Accepted Answer

The Federal Trade Commission Improvement Act authorizes the Federal Reserve Board to identify unfair or deceptive acts or practices on the part of banks and to issue regulations to prohibit them. The Truth in Lending Act requires disclosure of credit terms and costs, the Equal Credit Opportunity Act prohibits discrimination in credit, and the Fair Credit Billing Act establishes procedures for resolving billing disputes.

Question 13

The least used monetary policy instrument used by the Fed is
A)open market operations
B)changing the discount rate
C)changing the reserve requirement
D)none of the above

Accepted Answer

The reserve requirement is the least used monetary policy instrument by the Fed. The reserve requirement is the percentage of deposits that banks must hold in reserve and cannot lend out. Changing the reserve requirement can have a significant impact on the money supply but the Fed rarely uses this tool as it can be difficult to predict its effects and can create instability in the banking system. Open market operations, which involve buying or selling government securities in the open market to influence interest rates and the money supply, and changing the discount rate, which is the interest rate at which banks can borrow from the Fed, are more commonly used by the Fed.

Question 14

____________________________ prohibits discrimination in the granting of credit on the basis of sex, marital status, race, color, religion, national origin, age, or receipt of public assistance.
A)Truth in Lending Act
B)Equal Credit Opportunity Act
C)Federal Trade Commission Improvement Act
D)Fair Credit Billing Act

Accepted Answer

The Equal Credit Opportunity Act prohibits discrimination in the granting of credit on the basis of various factors such as sex, marital status, race, color, religion, national origin, age, or receipt of public assistance. The other options listed do not specifically pertain to this type of discrimination.

Question 15

The five components of the Federal Reserve System include:
A)Member banks, Federal Reserve District Banks, Board of Governors, Federal Open Market Committee, Adlib Monetary Committees.
B)Nonmember banks, Federal Reserve District Banks, Board of Governors, Federal Open Market Committee, Advisory committees.
C)Member banks, Federal Reserve District Banks, Board of Governors, Federal Open Market Committee, Advisory committees.
D)Member banks, Federal Reserve District Banks, Board of Governors, Federal Closed Market Committee, Advisory committees.
E)none of the above

Accepted Answer

The five components of the Federal Reserve System include member banks, Federal Reserve District Banks, Board of Governors, Federal Open Market Committee, and Advisory committees. The other options either have incorrect names or include non-existent committees/organizations.

Question 16

Although it enjoys substantial independence in its operations, the appointive power of the president and the ability of Congress to alter its structure make the ______________ a dependent political structure and one of the most powerful monetary organizations in the world.
A)Board of Governors (BOG)
B)Board of Directors (BOD)
C)Governing Body (GOB)
D)Financial Governors (FOG)
E)none of the above

Accepted Answer

The description given in the sentence specifically mentions the Board of Governors (BOG) as the dependent political structure with appointive power of the president and Congress's ability to alter its structure. Therefore, the correct answer is A) Board of Governors (BOG). The other options B) Board of Directors (BOD), C) Governing Body (GOB), and D) Financial Governors (FOG) are not relevant to the description given in the sentence.

Question 17

Approximately __________ of the nation's commercial banks are members of the Fed.
A)three-fourths
B)two-thirds.
C)one-third.
D)one-half.
E)none of the above

Accepted Answer

Approximately one-third of the nation's commercial banks are members of the Federal Reserve System.

Question 18

____________________________ requires disclosure of the finance charge and the annual percentage rate of credit along with certain other costs and terms to permit consumers to compare the prices of credit from differing sources.
A)Truth in Lending Act
B)Equal Credit Opportunity Act
C)Federal Trade Commission Improvement Act
D)Fair Credit Billing Act

Accepted Answer

The Truth in Lending Act (TILA) was enacted to protect consumers in credit transactions by requiring clear disclosure of key terms and costs associated with credit. This includes the disclosure of the finance charge and the annual percentage rate of credit, as well as other costs and terms, to allow consumers to compare credit offers from different sources.

Question 19

The Board of Governors publishes ________________, which carries articles of current interest and offers a convenient source of the statistics compiled by the Fed.
A)the Federal Reserve Magazine
B)the Federal Reserve Bulletin
C)the Federal Reserve Journal
D)the Federal Reserve News
E)none of the above

Accepted Answer

The Federal Reserve Bulletin is published by the Board of Governors and it contains articles of current interest as well as important statistics compiled by the Fed. The other options listed (Federal Reserve Magazine, Federal Reserve Journal, Federal Reserve News) are not actual publications by the Board of Governors.

Question 20

The ___________________ conducts monetary policy for the twelve European countries that formed the European Monetary Union and adopted the euro as their common currency at the beginning of 1999.
A)Bank of England
B)European Central Bank
C)Bank of Europe
D)Bank of Switzerland
E)none of the above

Accepted Answer

The European Central Bank (ECB) conducts monetary policy for the twelve European countries that formed the European Monetary Union and adopted the euro as their common currency at the beginning of 1999. The Bank of England is the central bank of the United Kingdom, the Bank of Europe does not exist, and the Bank of Switzerland only conducts monetary policy for Switzerland.

Quiz 4: Federal Reserve System

The Board of Governors of the Federal Reserve establishes monetary policy by:

__________ directors of the Federal Reserve are appointed by the Board of Governors of the Federal Reserve System and may not be stockholders, directors, or employees of existing banks.

In response to the 2007 - 2009 financial crisis, the Fed's prime credit rate, which was 6.25 percent at the end of 2006, was lowered to _____ percent by the end of 2008 and was maintained at that level through 2009. Too specific

Although it enjoys substantial independence in its operations, the appointive power of the president and the ability of Congress to alter its structure make the ______________ a dependent political structure and one of the most powerful monetary organizations in the world.

Which of the following is a method by which the Federal Reserve establishes monetary policy?

Currently, the Chairman of the Federal Reserve is ________________________.

The Board of Governors of the Federal Reserve establishes monetary policy by:

The five components of the Federal Reserve System include:

The Board of Governors publishes ________________, which carries articles of current interest and offers a convenient source of the statistics compiled by the Fed.

Which of the following is not a method by which the Federal Reserve establishes monetary policy?

____________________________ sets up a procedure for the prompt correction of errors on a revolving charge account and prevents damage to credit ratings while a dispute is being settled.

____________________________ authorizes the Federal Reserve Board to identify unfair or deceptive acts or practices on the part of banks and to issue regulations to prohibit them.

The least used monetary policy instrument used by the Fed is

____________________________ prohibits discrimination in the granting of credit on the basis of sex, marital status, race, color, religion, national origin, age, or receipt of public assistance.

The five components of the Federal Reserve System include:

Although it enjoys substantial independence in its operations, the appointive power of the president and the ability of Congress to alter its structure make the ______________ a dependent political structure and one of the most powerful monetary organizations in the world.

Approximately __________ of the nation's commercial banks are members of the Fed.

____________________________ requires disclosure of the finance charge and the annual percentage rate of credit along with certain other costs and terms to permit consumers to compare the prices of credit from differing sources.

The Board of Governors publishes ________________, which carries articles of current interest and offers a convenient source of the statistics compiled by the Fed.

The ___________________ conducts monetary policy for the twelve European countries that formed the European Monetary Union and adopted the euro as their common currency at the beginning of 1999.