Finance Lesson 4

Each Federal Reserve district bank president attends FOMC meetings; although only ________ Federal Reserve district bank presidents vote on policy, all ________ provide input. five; twelve
The designers of the Federal Reserve Act of 1913 intended the Fed to have one primary monetary tool, namely ________ discounting
All ________ are required to be members of the Federal Reserve System. nationally chartered banks
Which of the following are true statements? all of the above
The actual execution of open market operations is done at ________ the Federal Reserve Bank of New York.
The discount rate is ________ the interest rate on loans from the Federal Reserve to a bank.
Although it enjoys a high degree of autonomy, the Fed is still subject to the influence of Congress because ________ Congress can pass legislation that would restrict the Fed’s independence.
The Fed is reluctant to use reserve requirements to control the money supply because ________ all of the above
Banks subject to reserve requirements set by the Federal Reserve System include ________ all banks whether or not they are members of the Federal Reserve System.
The Federal Reserve entity that determines monetary policy strategy is the ________ Federal Open Market Committee.
If the Federal Reserve wants to expand reserves in the banking system, it will ________ purchase government securities.
Open market operations as a monetary policy tool have the advantage that ________ all of the above
Which Federal Reserve Bank president always has a vote in the Federal Open Market Committee? New York
Members of the Federal Reserve Board of Governors are ________ appointed by the President of the United States and confirmed by the Senate as members resign.
Advocates of Fed independence fear that subjecting the Fed to direct presidential or congressional control would ________ all of the above
Which of the following is not an element of the Federal Reserve System? the FDIC
A discount loan to a bank experiencing severe liquidity problems is called a ________ secondary credit.
The Federal Reserve will engage in an outright purchase of securities if it wants to ________ reserves ________ in the banking system. increase; permanently
The demand for reserves decreases and the federal funds rate falls when the Fed ________ decreases reserves requirements.
At its inception, the Federal Reserve was intended to be ________ a lender-of-last-resort.
Each member of the seven-member Federal Reserve Board of Governors is appointed by the President and confirmed by the Senate to serve ________ 14-year terms.
An open market ________ leads to a/an ________ of reserves and deposits in the banking system and hence to a/an ________ of the monetary base and the money supply. purchase; expansion; expansion
The Federal Open Market Committee consists of ________ the seven members of the Board of Governors and five presidents of the regional Fed banks.

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