Question 1

According to the theory of bureaucratic behavior,

Accepted Answer

A)   the objective of a bureaucracy is to maximize its own welfare, meaning that it seeks additional power and prestige.
B)   the bureaucracy will fight vigorously to preserve its autonomy; thus, it will attempt to avoid conflict with the president and Congress.
C)   the bureaucracy will support legislation that gives it additional regulatory power.
D)   all of the above describe bureaucratic behavior.

Question 2

Suppose legislation requiring the Fed to keep the inflation rate between 1.5% and 2.5% per year is passed by Congress.This law restricts the Fed's

Accepted Answer

A)   instrument independence.
B)   goal independence.
C)   both A and B of the above.
D)   neither A nor B of the above.

Question 3

According to the textbook authors,the Fed is

Accepted Answer

A)   remarkably free of the political pressures that influence other government agencies.
B)   more responsive to the political pressures that influence other government agencies.
C)   probably somewhat constrained in its policymaking by the congressional threat to reduce Fed independence.
D)   both A and C of the above.

Question 4

Which of the following are true statements?

Accepted Answer

A)   The FOMC usually meets every six weeks to set monetary policy.
B)   The FOMC issues directives to the trading desk at the New York Fed.
C)   Designers of the Federal Reserve Act did not envision the use of open market operations as a monetary policy tool.
D)   All of the above are true statements.
E)   Only A and B of the above are true statements.

Question 5

The FOMC is an element of the Federal Reserve System.

Accepted Answer

A) True 
 B)False

Question 6

Of all commercial banks,about ________ percent belong to the Federal Reserve System.

Accepted Answer

A)   10
B)   25
C)   33
D)   50

Question 7

Each Fed bank president attends FOMC meetings; although only ________ Fed bank presidents vote on policy,all ________ provide input.

Accepted Answer

A)   three; ten
B)   five; ten
C)   three; twelve
D)   five; twelve

Question 8

Although the Federal Open Market Committee does not have formal authority to set ________ and the ________,it does possess the authority in practice.

Accepted Answer

A)   margin requirements; discount rate
B)   margin requirements; federal funds rate
C)   reserve requirements; discount rate
D)   reserve requirements; federal funds rate

Question 9

The Federal Reserve banks act as liaisons between the business community and the Federal Reserve System.

Accepted Answer

A) True 
 B)False

Question 10

Supporters of the current system of Fed independence believe that a less autonomous Fed would

Accepted Answer

A)   adopt a long-run bias toward policymaking.
B)   pursue overly expansionary monetary policies.
C)   be more likely to create a political business cycle.
D)   do only B and C of the above.

Question 11

The Federal Open Market Committee consists of

Accepted Answer

A)   the five senior members of the seven-member Board of Governors.
B)   the seven members of the Board of Governors and seven presidents of the regional Fed banks.
C)   the seven members of the Board of Governors and five presidents of the regional Fed banks.
D)   the twelve regional Fed bank presidents and the chairman of the Board of Governors.

Question 12

The ________ Fed bank,with about 25 percent of the system's assets,is the most important of the Federal Reserve banks.

Accepted Answer

A)   Chicago
B)   Los Angeles
C)   Miami
D)   New York
E)   Washington, D.C.

Question 13

Critics of Fed independence argue

Accepted Answer

A)   that it is undemocratic to have monetary policy controlled by an elite group responsible to no one.
B)   that independence seemingly does little to guarantee good monetary policy.
C)   that its independence may encourage the Fed to pursue a course of narrow self-interest rather than the public interest.
D)   all of the above.

Question 14

Former Congressman Jack Kemp reportedly once said that he wanted to become the most powerful man in Washington,D.C.-the chairman of the Board of Governors of the Federal Reserve System.What does Representative Kemp's comment imply about the power of the chairman of the Federal Reserve? Do you think he may have been exaggerating? Explain.

Accepted Answer

Federal Reserve System is the central ba...

Question 15

The Board of Governors

Accepted Answer

A)   establishes, within limits, reserve requirements.
B)   effectively sets the discount rate.
C)   sets margin requirements.
D)   does all of the above.
E)   does only A and B of the above.

Question 16

Each member of the seven-member Board of Governors is appointed by the president and confirmed by the Senate to serve

Accepted Answer

A)   4-year terms.
B)   6-year terms.
C)   14-year terms.
D)   as long as the appointing president remains in office.

Question 17

The Federal Advisory Council has ________ member(s) from each district.

Accepted Answer

A)   one
B)   two
C)   three
D)   can have any number of

Question 18

Countries with more independent central banks have lower inflation rates,but these have come at the expense of greater output fluctuations.

Accepted Answer

A) True 
 B)False

Question 19

The Federal Reserve entity that determines monetary policy strategy is the

Accepted Answer

A)   Board of Governors.
B)   Federal Open Market Committee.
C)   Chairman of the Board of Governors.
D)   Shadow Open Market Committee.

Question 20

Factors that provide the Federal Reserve with a high degree of independence include

Accepted Answer

A)   14-year terms for members of the Board of Governors.
B)   a four-year term for the chairman of the Board of Governors that is not coincident with the president's term of office.
C)   constitutional independence from Congress and the president.
D)   all of the above.
E)   only A and B of the above.

Exam 9: Central Banks and the Federal Reserve System

Correct Answer
verified
Federal Reserve System is the central ba...
View Answer

Each member of the seven-member Board of Governors is appointed by the president and confirmed by the Senate to serve

Correct Answer
verified

According to the theory of bureaucratic behavior,

Correct Answer
verified

The Board of Governors

Correct Answer
verified

Critics of Fed independence argue

Correct Answer
verified

Of all commercial banks,about ________ percent belong to the Federal Reserve System.

Correct Answer
verified

Which of the following are true statements?

Correct Answer
verified

The ________ Fed bank,with about 25 percent of the system's assets,is the most important of the Federal Reserve banks.

Correct Answer
verified

Each Fed bank president attends FOMC meetings; although only Fed bank presidents vote on policy,all provide input.

Correct Answer
verified

Factors that provide the Federal Reserve with a high degree of independence include

Correct Answer
verified

The Federal Open Market Committee consists of

Correct Answer
verified

The Federal Reserve entity that determines monetary policy strategy is the

Correct Answer
verified

Supporters of the current system of Fed independence believe that a less autonomous Fed would

Correct Answer
verified

Although the Federal Open Market Committee does not have formal authority to set and the ,it does possess the authority in practice.

Correct Answer
verified

According to the textbook authors,the Fed is

Correct Answer
verified

The FOMC is an element of the Federal Reserve System.

Correct Answer
verified

Countries with more independent central banks have lower inflation rates,but these have come at the expense of greater output fluctuations.

Correct Answer
verified

The Federal Reserve banks act as liaisons between the business community and the Federal Reserve System.

Correct Answer
verified

The Federal Advisory Council has ________ member(s) from each district.

Correct Answer
verified

Suppose legislation requiring the Fed to keep the inflation rate between 1.5% and 2.5% per year is passed by Congress.This law restricts the Fed's

Correct Answer
verified

Exam 9: Central Banks and the Federal Reserve System

Correct AnswerverifiedFederal Reserve System is the central ba...View AnswerShow Answer

Each member of the seven-member Board of Governors is appointed by the president and confirmed by the Senate to serve

Correct AnswerverifiedShow Answer

According to the theory of bureaucratic behavior,

Correct AnswerverifiedShow Answer

The Board of Governors

Correct AnswerverifiedShow Answer

Critics of Fed independence argue

Correct AnswerverifiedShow Answer

Of all commercial banks,about ________ percent belong to the Federal Reserve System.

Correct AnswerverifiedShow Answer

Which of the following are true statements?

Correct AnswerverifiedShow Answer

The ________ Fed bank,with about 25 percent of the system's assets,is the most important of the Federal Reserve banks.

Correct AnswerverifiedShow Answer

Each Fed bank president attends FOMC meetings; although only ________ Fed bank presidents vote on policy,all ________ provide input.

Correct AnswerverifiedShow Answer

Factors that provide the Federal Reserve with a high degree of independence include

Correct AnswerverifiedShow Answer

The Federal Open Market Committee consists of

Correct AnswerverifiedShow Answer

The Federal Reserve entity that determines monetary policy strategy is the

Correct AnswerverifiedShow Answer

Supporters of the current system of Fed independence believe that a less autonomous Fed would

Correct AnswerverifiedShow Answer

Although the Federal Open Market Committee does not have formal authority to set ________ and the ________,it does possess the authority in practice.

Correct AnswerverifiedShow Answer

According to the textbook authors,the Fed is

Correct AnswerverifiedShow Answer

The FOMC is an element of the Federal Reserve System.

Correct AnswerverifiedShow Answer

Countries with more independent central banks have lower inflation rates,but these have come at the expense of greater output fluctuations.

Correct AnswerverifiedShow Answer

The Federal Reserve banks act as liaisons between the business community and the Federal Reserve System.

Correct AnswerverifiedShow Answer

The Federal Advisory Council has ________ member(s) from each district.

Correct AnswerverifiedShow Answer

Suppose legislation requiring the Fed to keep the inflation rate between 1.5% and 2.5% per year is passed by Congress.This law restricts the Fed's

Correct AnswerverifiedShow Answer

Correct Answer
verified
Federal Reserve System is the central ba...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Each Fed bank president attends FOMC meetings; although only Fed bank presidents vote on policy,all provide input.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Although the Federal Open Market Committee does not have formal authority to set and the ,it does possess the authority in practice.

Correct Answer
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Correct Answer
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