Question 1

The National Banking Acts of 1863 and 1864 were

Accepted Answer

A)   totally eliminated under the Federal Reserve Act of 1913.
B)   were modified to permit greater flexibility of operations under the Federal Reserve Act of 1913.
C)   were unaffected by the Federal Reserve Act of 1913.
D)   found unconstitutional by the Supreme Court.

Question 2

The federal government has historically played a very passive role in encouraging home ownership by supporting liquid markets for home mortgages.

Accepted Answer

A) True 
 B)False

Question 3

A major weakness of the banking system under the National Banking Acts was that the money supply could not be easily expanded or contracted to meet changing seasonal needs and/or changes in economic activity.

Accepted Answer

A) True 
 B)False

Question 4

Also known as the Fed.

Accepted Answer

A)   Government National Mortgage Association
B)   Federal National Mortgage Association
C)   Federal Home Loan Mortgage Corporation
D)   Federal Reserve System

Question 5

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.

Accepted Answer

A)   Bank of England
B)   European Central Bank
C)   Bank of Europe
D)   Bank of Switzerland

Question 6

The Class C directors of each Federal Reserve Bank are

Accepted Answer

A)   appointed by the Board of Governors of the Federal Reserve System.
B)   elected by the member banks.
C)   chosen by the Board of Governors and by the member banks.
D)   appointed by the President of the United States with the advice and consent of the Senate.

Question 7

When the Federal Reserve System was created, it was thought that its most important influence over monetary conditions would be

Accepted Answer

A)   lending to banks to bolster their reserve positions.
B)   quantitative easing.
C)   the issuance of Federal Reserve notes.
D)   the changing of reserve requirements.

Question 8

Eligible paper that the borrowing institution can sell to the Reserve Bank includes

Accepted Answer

A)   common stock.
B)   corporate bonds.
C)   U.S. government bonds.
D)   insurance policies.

Question 9

Total deposits can be contracted by holding the amount of reserves constant but raising the reserve requirement.

Accepted Answer

A) True 
 B)False

Question 10

Each Federal Reserve Bank has a president and first vice president who are appointed by

Accepted Answer

A)   the Board of Governors.
B)   the President of the United States.
C)   the President of the United States with the advice and consent of the Senate.
D)   its board of directors.

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.

Accepted Answer

A)   Truth in Lending Act
B)   Equal Credit Opportunity Act
C)   Federal Trade Commission Improvement Act
D)   Fair Credit Billing Act

Question 12

The Federal Open Market committee

Accepted Answer

A)   establishes and administers protective consumer finance regulations.
B)   furnishes currencies.
C)   handles U.S. government debt and cash balances.
D)   buys and sells securities.

Question 13

If excess reserves are near zero, then a reduction of a bank's reserves will cause the system to loosen credit.

Accepted Answer

A) True 
 B)False

Question 14

The effect of an increase of required reserves by the Fed is

Accepted Answer

A)   a decrease in loanable funds of depository institutions.
B)   a decrease in interest rates.
C)   an increase of excess reserves.
D)   to stimulate activity in the home construction field.

Question 15

About one-third of the nation's commercial banks are members of the Fed.

Accepted Answer

A) True 
 B)False

Question 16

The most-used instrument of monetary policy is open-market operations.

Accepted Answer

A) True 
 B)False

Question 17

Banks with large transaction account balances hold the same percentage of reserves as all other banks.

Accepted Answer

A) True 
 B)False

Question 18

The members of the Fed Board of Governors are

Accepted Answer

A)   elected by the member banks.
B)   appointed by the President of the United States with the advice and consent of the Senate.
C)   appointed by the Secretary of the Treasury.
D)   appointed by each of the Federal Reserve banks.

Question 19

The United States created its system of central banking

Accepted Answer

A)   earlier than such banks were established in other industrial nations.
B)   later than such banks were established in other industrial nations.
C)   to facilitate branch banking.
D)   to facilitate international exchange operations.

Question 20

Today the responsibilities of the Fed may be described as

Accepted Answer

A)   those relating to monetary policy, to supervision and regulation, and to services provided for depository institutions and the government.
B)   those relating to fiscal policy, to supervision and regulation, and to services provided for depository institutions and the government.
C)   those relating to monetary policy, to deregulation, and to services provided for depository institutions and the government.
D)   those relating to monetary policy, to supervision and regulation, and to services provided for homeowners and the government.

Exam 4: Federal Reserve System

The United States created its system of central banking

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Also known as the Fed.

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Today the responsibilities of the Fed may be described as

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Eligible paper that the borrowing institution can sell to the Reserve Bank includes

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The most-used instrument of monetary policy is open-market operations.

Correct AnswerverifiedShow Answer

The federal government has historically played a very passive role in encouraging home ownership by supporting liquid markets for home mortgages.

Correct AnswerverifiedShow Answer

About one-third of the nation's commercial banks are members of the Fed.

Correct AnswerverifiedShow Answer

A major weakness of the banking system under the National Banking Acts was that the money supply could not be easily expanded or contracted to meet changing seasonal needs and/or changes in economic activity.

Correct AnswerverifiedShow Answer

The members of the Fed Board of Governors are

Correct AnswerverifiedShow Answer

Banks with large transaction account balances hold the same percentage of reserves as all other banks.

Correct AnswerverifiedShow Answer

Each Federal Reserve Bank has a president and first vice president who are appointed by

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

The Class C directors of each Federal Reserve Bank are

Correct AnswerverifiedShow Answer

The Federal Open Market committee

Correct AnswerverifiedShow Answer

When the Federal Reserve System was created, it was thought that its most important influence over monetary conditions would be

Correct AnswerverifiedShow Answer

____________________________ 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.

Correct AnswerverifiedShow Answer

Total deposits can be contracted by holding the amount of reserves constant but raising the reserve requirement.

Correct AnswerverifiedShow Answer

If excess reserves are near zero, then a reduction of a bank's reserves will cause the system to loosen credit.

Correct AnswerverifiedShow Answer

The effect of an increase of required reserves by the Fed is

Correct AnswerverifiedShow Answer

The National Banking Acts of 1863 and 1864 were

Correct AnswerverifiedShow Answer

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