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Multiple Choice Quiz
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1
Each president of a Reserve Bank serves for a:
A)Fourteen-year term.
B)Five-year term.
C)Seven-year term.
D)Two-year renewable term.
2
Buying and selling U.S. Treasury Securities for the Fed's own portfolio is called:
A)Managing the float.
B)Discount buying.
C)Open market operations.
D)Reserve adjustment.
3
Members of the Board of Governors of the Fed:
A)Can be reappointed after their term expires.
B)Must leave office when there is a new administration elected.
C)Serve one non-renewable fourteen-year term.
D)Are appointed for life, though they can resign at any time.
4
Which of the following is (are) not a permanent voting member(s) on the FOMC?
A)The seven Governors of the Fed.
B)The Secretary of the Treasury.
C)The President of the Federal Reserve Bank of New York.
D)The chair of the Board of Governors.
5
The federal funds rate is the interest rate:
A)The Fed charges banks who borrow from it.
B)Banks charge each other for overnight loans on their excess deposits at the Fed.
C)The U.S. Treasury charges banks that need emergency funds.
D)The FDIC charges banks who need to borrow from it to meet depositor demands.
6
The European Central Bank has ensured independence by:
A)Explicitly forbidding the Governing Council from taking instructions from any government.
B)Making sure the ECB's financial interests supports member countries' political organizations.
C)By appointing the Executive board members for life.
D)Not taking votes on policy matters.
7
In the meetings of the Governing Council of the European Central Bank, formal votes are:
A)Taken and published immediately.
B)Not taken, since formal voting could get in the way of good policy.
C)Taken but not published for five years.
D)Taken and released two years after the meetings.
8
The real power in the FOMC lies with:
A)The President of the New York Fed Bank.
B)The System Open Market Manager.
C)The Chair of the Board of Governors.
D)No single individual; all participants have an equal share of the power.
9
The objectives set for the Fed by Congress are:
A)Very specific; this adds to the Fed's accountability.
B)By design, quite vague, allowing the Fed to really set its own goals.
C)Specific regarding inflation, but vague on all other goals.
D)Specific on the growth rate for the economy, but vague on all other objectives.
10
The largest of the regional Federal Reserve Banks is located in:
A)Washington D.C.
B)San Francisco since it serves almost one-third of the country.
C)New York City.
D)Kansas City.
11
The Reserve Banks of the Federal Reserve System are owned by:
A)The taxpayers in their districts.
B)The U.S. Treasury.
C)The Board of Governors.
D)The commercial banks in their districts.
12
To make sure the U.S. President cannot unduly influence the Board of Governors:
A)The terms of the governors are staggered.
B)The law prevents a resident from appointing more than one governor.
C)The terms of the governors are ten years long.
D)Only three governors can be replaced in any one year.
13
Which of the books used at the FOMC meetings is/are treated as secret documents and not released to the public until after a number of years have passed?
A)The teal book and the beige book.
B)The beige book and the green book.
C)The blue book and the green book.
D)Only the teal book.
14
Most of the Fed's income is:
A)Paid to member banks in the form of a dividend.
B)Sent to the FDIC to shore up the depositor insurance fund.
C)Returned to the U.S. Treasury.
D)Used to build the Fed's portfolio of securities.
15
The makeup of the Governing Council of the European Central Bank and the methods used to calculate price stability for the monetary system can potentially result in:
A)Small countries having undue influence on the decisions of the Council.
B)Monetary policy that is well suited for some countries but ill suited for others.
C)A policy for the median country rather than a policy well suited for any country.
D)All of the results listed are possible.







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