Question 1

William Jennings Bryan,Secretary of State at the time of the passage of the Federal Reserve Act,argued in favor of having ______ district banks.

Accepted Answer

A)  six
B)  not less than eight nor more than twelve
C)  twelve
D)  fifty

Question 2

If the Fed raises the discount rate at the same time it conducts an open market sale,it follows that the money supply will

Accepted Answer

A)  fall.
B)  rise.
C)  remain unchanged.
D)  There is not enough information to answer the question.

Question 3

Which of the following is not a function of the Fed?

Accepted Answer

A)  to provide check-clearing services
B)  to hold depository institutions' reserves
C)  to serve as the government's banker
D)  to serve as the borrower of last resort
E)  none of the above

Question 4

If the federal funds rate falls below the discount rate,banks will decrease their borrowings from __________ and __________ their borrowings from __________.It follows that when one bank borrows from __________,reserves in the banking system __________.

Accepted Answer

A)  other banks;increase;the Fed;another bank;remain unchanged
B)  the Fed;decrease;other banks;another bank;remain unchanged
C)  other banks;increase;the U.S.Treasury;the Treasury;increase
D)  the Fed;increase;other banks;another bank;remain unchanged
E)  none of the above

Question 5

When a check is written on an account at Bank A and deposited in Bank B,the reserve account of __________ will rise and reserves of the entire banking system will __________.

Accepted Answer

A)  Bank A;rise
B)  Bank A;remain constant
C)  Bank B;rise
D)  Bank B;remain constant

Question 6

When the Fed engages in quantitative easing,it alters ______________________ and when the Fed makes open market purchases it alters _______________________.

Accepted Answer

A)  short-term interest rates;long-term interest rates
B)  long-term interest rates;short-term interest rates
C)  the required reserve ratio;income tax rates
D)  income tax rates;the required reserve ratio

Question 7

To limit political influence on Fed policy,the terms of the Fed Board of Governors are staggered so that one new appointment is made every four years to coincide with the presidential elections.

Accepted Answer

A) True 
 B)False

Question 8

The federal funds rate and the quantity demanded of reserves have a(n) ____________ relationship.This is because as the federal funds rate moves down,it becomes _______________ for banks to hold reserves,encouraging banks to hold ____________ in reserves to guard against checkable deposit withdrawals.

Accepted Answer

A)  inverse;more expensive;more
B)  direct;more expensive;less
C)  inverse;cheaper;more
D)  direct;cheaper;more

Question 9

The demand for reserves curve in the federal funds market is

Accepted Answer

A)  horizontal.
B)  vertical.
C)  upward sloping.
D)  downward sloping.

Question 10

If the Fed ______________________,the money supply will ultimately __________.

Accepted Answer

A)  raises the required reserve ratio from 8 percent to 10 percent;decrease
B)  lowers the required reserve ratio from 10 percent to 8 percent;increase
C)  lowers the required reserve ratio from 10 percent to 8 percent;decrease
D)  raises the required reserve ratio from 8 percent to 10 percent;increase
E)  a and b

Question 11

The president of the ________________________ holds a permanent seat on the FOMC.

Accepted Answer

A)  United States
B)  Federal Reserve District Bank of New York
C)  Federal Reserve District Bank of San Francisco
D)  U.S.Senate banking committee
E)  none of the above

Question 12

The lower the required reserve ratio,

Accepted Answer

A)  the less money that can be loaned at each round of the lending process.
B)  the larger the simple deposit multiplier.
C)  the smaller the simple deposit multiplier.
D)  the fewer excess reserves there are at each round of the simple deposit multiplier process.
E)  a,c,and d

Question 13

If the Fed wants to increase the money supply,it can __________ the required reserve ratio,conduct an open market __________,or __________the discount rate.

Accepted Answer

A)  lower;sale;raise
B)  lower;purchase;raise
C)  lower;purchase;lower
D)  raise;sale;lower
E)  raise;purchase;raise

Question 14

The Federal Reserve System began operations in

Accepted Answer

A)  1834.
B)  1896.
C)  1914.
D)  1935.

Question 15

The Federal Open Market Committee (FOMC)

Accepted Answer

A)  has six members.
B)  conducts open market operations.
C)  is the policy-making body within the Treasury.
D)  is the governing body of the Federal Reserve System.
E)  a,b,and c

Question 16

Which of the following statements is false?

Accepted Answer

A)  The Fed has the legal authority to create money out of thin air.
B)  There is a direct relationship between the money supply and the required reserve ratio.
C)  The Fed can cause money to disappear into thin air.
D)  The federal funds market is a market in which banks can borrow money from other banks.

Question 17

An open market __________ by the Fed increases the money supply;a(n) __________ in the required reserve ratio increases the money supply.

Accepted Answer

A)  sale;decrease
B)  purchase;increase
C)  sale;increase
D)  purchase;decrease

Question 18

Which of the following is not a function of the Federal Reserve System?

Accepted Answer

A)  to clear checks
B)  to supervise member banks
C)  to serve as the lender of last resort
D)  to handle the sale of U.S.Treasury securities
E)  to serve as the government's tax collector

Exam 13: The Federal Reserve System

The Federal Reserve System began operations in

Correct Answer
verified

Which of the following statements is false?

Correct Answer
verified

The lower the required reserve ratio,

Correct Answer
verified

To limit political influence on Fed policy,the terms of the Fed Board of Governors are staggered so that one new appointment is made every four years to coincide with the presidential elections.

Correct Answer
verified

If the Fed wants to increase the money supply,it can the required reserve ratio,conduct an open market ,or __the discount rate.

Correct Answer
verified

When the Fed engages in quantitative easing,it alters and when the Fed makes open market purchases it alters _.

Correct Answer
verified

The president of the ________________________ holds a permanent seat on the FOMC.

Correct Answer
verified

The Federal Open Market Committee (FOMC)

Correct Answer
verified

If the federal funds rate falls below the discount rate,banks will decrease their borrowings from and their borrowings from .It follows that when one bank borrows from ,reserves in the banking system __.

Correct Answer
verified

An open market by the Fed increases the money supply;a(n) in the required reserve ratio increases the money supply.

Correct Answer
verified

The federal funds rate and the quantity demanded of reserves have a(n) ____ relationship.This is because as the federal funds rate moves down,it becomes _ for banks to hold reserves,encouraging banks to hold ______ in reserves to guard against checkable deposit withdrawals.

Correct Answer
verified

Which of the following is not a function of the Federal Reserve System?

Correct Answer
verified

The demand for reserves curve in the federal funds market is

Correct Answer
verified

When a check is written on an account at Bank A and deposited in Bank B,the reserve account of will rise and reserves of the entire banking system will .

Correct Answer
verified

If the Fed raises the discount rate at the same time it conducts an open market sale,it follows that the money supply will

Correct Answer
verified

William Jennings Bryan,Secretary of State at the time of the passage of the Federal Reserve Act,argued in favor of having ______ district banks.

Correct Answer
verified

If the Fed ____________,the money supply will ultimately .

Correct Answer
verified

Which of the following is not a function of the Fed?

Correct Answer
verified

Exam 13: The Federal Reserve System

The Federal Reserve System began operations in

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

The lower the required reserve ratio,

Correct AnswerverifiedShow Answer

To limit political influence on Fed policy,the terms of the Fed Board of Governors are staggered so that one new appointment is made every four years to coincide with the presidential elections.

Correct AnswerverifiedShow Answer

If the Fed wants to increase the money supply,it can __________ the required reserve ratio,conduct an open market __________,or __________the discount rate.

Correct AnswerverifiedShow Answer

When the Fed engages in quantitative easing,it alters ______________________ and when the Fed makes open market purchases it alters _______________________.

Correct AnswerverifiedShow Answer

The president of the ________________________ holds a permanent seat on the FOMC.

Correct AnswerverifiedShow Answer

The Federal Open Market Committee (FOMC)

Correct AnswerverifiedShow Answer

If the federal funds rate falls below the discount rate,banks will decrease their borrowings from __________ and __________ their borrowings from __________.It follows that when one bank borrows from __________,reserves in the banking system __________.

Correct AnswerverifiedShow Answer

An open market __________ by the Fed increases the money supply;a(n) __________ in the required reserve ratio increases the money supply.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not a function of the Federal Reserve System?

Correct AnswerverifiedShow Answer

The demand for reserves curve in the federal funds market is

Correct AnswerverifiedShow Answer

When a check is written on an account at Bank A and deposited in Bank B,the reserve account of __________ will rise and reserves of the entire banking system will __________.

Correct AnswerverifiedShow Answer

If the Fed raises the discount rate at the same time it conducts an open market sale,it follows that the money supply will

Correct AnswerverifiedShow Answer

William Jennings Bryan,Secretary of State at the time of the passage of the Federal Reserve Act,argued in favor of having ______ district banks.

Correct AnswerverifiedShow Answer

If the Fed ______________________,the money supply will ultimately __________.

Correct AnswerverifiedShow Answer

Which of the following is not a function of the Fed?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

If the Fed wants to increase the money supply,it can the required reserve ratio,conduct an open market ,or __the discount rate.

Correct Answer
verified

When the Fed engages in quantitative easing,it alters and when the Fed makes open market purchases it alters _.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

If the federal funds rate falls below the discount rate,banks will decrease their borrowings from and their borrowings from .It follows that when one bank borrows from ,reserves in the banking system __.

Correct Answer
verified

An open market by the Fed increases the money supply;a(n) in the required reserve ratio increases the money supply.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

When a check is written on an account at Bank A and deposited in Bank B,the reserve account of will rise and reserves of the entire banking system will .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

If the Fed ____________,the money supply will ultimately .

Correct Answer
verified

Correct Answer
verified