Question 1

Exhibit 13-2
 
-Refer to Exhibit 13-2.What word (up or down) should go in the place of blank (5) and blank (6) ,respectively?

Accepted Answer

A)   up;up
B)   up;down
C)   down;up
D)   down;down

Question 2

In its current execution of monetary policy,the Fed does not usually have a specific _____________ target,but rather it tries to target a specific ________________.

Accepted Answer

A)   money supply;federal funds rate
B)   federal funds rate;money supply
C)   money supply;discount rate
D)   required reserves ratio;discount rate

Question 3

The Fed can change the federal funds rate by issuing an order,but it cannot change the discount rate this way.

Accepted Answer

A) True 
 B)False

Question 4

The three members of the commission that originally drew up the boundaries of the Federal Reserve Districts and the locations of the district banks were the

Accepted Answer

A)   Comptroller of the Currency,the Secretary of the Treasury,and the Secretary of Agriculture.
B)   Secretary of State,the Secretary of the Treasury,and the Speaker of the House of Representatives.
C)   Secretary of State,the Secretary of Commerce,and the Vice President.
D)   Secretary of the Treasury,the Secretary of Commerce,and the Vice President. A

Question 5

Which of the following Fed actions will decrease the money supply?

Accepted Answer

A)   an open market purchase of Treasury bills
B)   an increase in the required reserve ratio
C)   a decrease in the discount rate relative to the federal funds rate
D)   all of the above
E)   none of the above

Question 6

Exhibit 13-2
 
-Refer to Exhibit 13-2.What word (up or down) should go in the place of blank (3) and blank (4) ,respectively?

Accepted Answer

A)   up;up
B)   up;down
C)   down;up
D)   down;down

Question 7

Open market purchases of government securities

Accepted Answer

A)   are designed to increase trading on the stock exchange.
B)   generally decrease the money supply.
C)   always decrease the money supply.
D)   cause bank reserves to increase.
E)   all of the above

Question 8

To decrease the money supply,the Fed may sell government securities or lower taxes.

Accepted Answer

A) True 
 B)False

Question 9

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 serve as a fiscal agent for the U.S.Treasury
E)   to serve as the government's tax collector

Question 10

The Board of Governors of the Federal Reserve is comprised of

Accepted Answer

A)   seven persons,each appointed to a seven-year term.
B)   seven persons,each appointed to a fourteen-year term.
C)   fourteen persons,each appointed to a seven-year term.
D)   twelve persons,each appointed to a seven-year term.
E)   twelve persons,each appointed to a fourteen-year term.

Question 11

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 12

When the Federal Reserve system was being created,some people thought that there should be as few district banks as possible to enhance efficiency and for ease of operation.

Accepted Answer

A) True 
 B)False

Question 13

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 14

The Federal Open Market Committee (FOMC) is composed of the seven members of the Board of Governors,

Accepted Answer

A)   the president of the New York Federal Reserve District Bank,and four of the remaining 11 Federal Reserve District Bank presidents who rotate on an annual basis.
B)   and five state governors who rotate on an annual basis.
C)   four Federal Reserve District Bank presidents who rotate on an annual basis,and the head of the Senate Banking Committee.
D)   and the Secretary of the Treasury.

Question 15

The larger the simple deposit multiplier,

Accepted Answer

A)   the higher the required reserve ratio.
B)   the higher the discount rate.
C)   the larger the change in the money supply for a given change in deposits.
D)   the less likely the Fed will be to use its monetary policy tools.

Question 16

When the Federal Open Market Committee (FOMC)votes on policy,it does so in the following order: the chair votes first,the vice chair votes second,and the remaining FOMC members vote based on their seniority at the Fed.

Accepted Answer

A) True 
 B)False  False

Question 17

Which of the following is not a major responsibility of the Fed?

Accepted Answer

A)   controlling the money supply
B)   serving as the federal government's banker
C)   determining tax rates
D)   acting as a lender of last resort

Question 18

The interest rate that the Fed charges when it lends reserves to banks is called the federal funds rate.

Accepted Answer

A) True 
 B)False  False

Question 19

The supply curve of reserves has two kinks in it: one at the _________________ and the other at the ____________________ rate.

Accepted Answer

A)   interest rate that the Fed pays on reserves;discount
B)   federal funds rate;discount
C)   discount rate;prime rate
D)   federal funds rate;prime rate

Question 20

The Board of Governors of the Federal Reserve serves on a larger policy-making group called the House Banking Committee.

Accepted Answer

A) True 
 B)False

Exam 13: The Federal Reserve System

Exhibit 13-2 -Refer to Exhibit 13-2.What word (up or down) should go in the place of blank (5) and blank (6) ,respectively?

Correct AnswerverifiedShow Answer

In its current execution of monetary policy,the Fed does not usually have a specific _____________ target,but rather it tries to target a specific ________________.

Correct AnswerverifiedShow Answer

The Fed can change the federal funds rate by issuing an order,but it cannot change the discount rate this way.

Correct AnswerverifiedShow Answer

The three members of the commission that originally drew up the boundaries of the Federal Reserve Districts and the locations of the district banks were the

Correct AnswerverifiedA

Which of the following Fed actions will decrease the money supply?

Correct AnswerverifiedShow Answer

Exhibit 13-2 -Refer to Exhibit 13-2.What word (up or down) should go in the place of blank (3) and blank (4) ,respectively?

Correct AnswerverifiedShow Answer

Open market purchases of government securities

Correct AnswerverifiedShow Answer

To decrease the money supply,the Fed may sell government securities or lower taxes.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Board of Governors of the Federal Reserve is comprised of

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

When the Federal Reserve system was being created,some people thought that there should be as few district banks as possible to enhance efficiency and for ease of operation.

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

The Federal Open Market Committee (FOMC) is composed of the seven members of the Board of Governors,

Correct AnswerverifiedShow Answer

The larger the simple deposit multiplier,

Correct AnswerverifiedShow Answer

When the Federal Open Market Committee (FOMC)votes on policy,it does so in the following order: the chair votes first,the vice chair votes second,and the remaining FOMC members vote based on their seniority at the Fed.

Correct AnswerverifiedFalse

Which of the following is not a major responsibility of the Fed?

Correct AnswerverifiedShow Answer

The interest rate that the Fed charges when it lends reserves to banks is called the federal funds rate.

Correct AnswerverifiedFalse

The supply curve of reserves has two kinks in it: one at the _________________ and the other at the ____________________ rate.

Correct AnswerverifiedShow Answer

The Board of Governors of the Federal Reserve serves on a larger policy-making group called the House Banking Committee.

Correct AnswerverifiedShow Answer

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In its current execution of monetary policy,the Fed does not usually have a specific _ target,but rather it tries to target a specific ____.

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A

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

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False

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The supply curve of reserves has two kinks in it: one at the _ and the other at the ____ rate.

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