Question 1

The federal funds rate is the rate at which the Fed lends money directly to member banks. 
 ​

Accepted Answer

A) True 
 B)False

Question 2

When the Fed sells securities, the total funds of commercial banks ____ by the market value of the securities sold by the Fed. This activity initiated by the FOMC's policy directive is referred to as a ____ of money supply growth.

Accepted Answer

A) increase; loosening 
B) decrease; loosening 
C) increase; tightening 
D) decrease; tightening 
E) None of these are correct. 
A) increase; loosening 
B) decrease; loosening 
C) increase; tightening 
D) decrease; tightening 
E) None of these are correct.

Question 3

The primary credit rate is the interest rate that the Fed charges the most creditworthy depository institutions for short-term loans.

Accepted Answer

A) True 
 B)False

Question 4

The Trading Desk is sometimes directed to ____ a sufficient amount of Treasury securities to ____ the federal funds rate to a new targeted level set by the FOMC.

Accepted Answer

A) buy; lower 
B) sell; increase 
C) buy; increase 
D) sell; lower 
E) buy; lower AND sell; increase 
A) buy; lower 
B) sell; increase 
C) buy; increase 
D) sell; lower 
E) buy; lower AND sell; increase

Question 5

The chief objective of the European Central Bank is ____ in the countries of the eurozone.

Accepted Answer

A) maintaining low unemployment 
B) ensuring that budget deficits do not exceed certain limits 
C) maintaining price and currency stability 
D) None of these are correct. 
A) maintaining low unemployment 
B) ensuring that budget deficits do not exceed certain limits 
C) maintaining price and currency stability 
D) None of these are correct.

Question 6

The Board of Governors is composed of ​

Accepted Answer

A) seven members appointed by the President of the United States. 
B) the 12 presidents of Fed district banks. 
C) the Federal Open Market Committee, plus the Federal Advisory Council. 
D) the Federal Open Market Committee, plus the President of the United States. 
A) seven members appointed by the President of the United States. 
B) the 12 presidents of Fed district banks. 
C) the Federal Open Market Committee, plus the Federal Advisory Council. 
D) the Federal Open Market Committee, plus the President of the United States.

Question 7

Which of the following is currently a main role of the Federal Reserve's Board of Governors?

Accepted Answer

A) regulating commercial banks 
B) regulating foreign trade 
C) controlling monetary policy 
D) regulating commercial banks AND controlling monetary policy 
A) regulating commercial banks 
B) regulating foreign trade 
C) controlling monetary policy 
D) regulating commercial banks AND controlling monetary policy

Question 8

Which of the following is NOT an activity of Fed district banks?

Accepted Answer

A) clearing checks 
B) replacing old currency 
C) providing loans to depository institutions 
D) acting as an intermediary to match up lenders and borrowers in the stock market 
A) clearing checks 
B) replacing old currency 
C) providing loans to depository institutions 
D) acting as an intermediary to match up lenders and borrowers in the stock market

Question 9

The               the reserve requirement ratio, the               the ultimate effect of any initial increase in the money supply.

Accepted Answer

A) lower; less 
B) lower; greater 
C) greater; less 
D) lower; greater AND greater; less 
A) lower; less 
B) lower; greater 
C) greater; less 
D) lower; greater AND greater; less

Question 10

The ____ is directly responsible for setting reserve requirements. ​

Accepted Answer

A) Federal Advisory Council 
B) FOMC 
C) Board of Governors 
D) President of the United States 
A) Federal Advisory Council 
B) FOMC 
C) Board of Governors 
D) President of the United States

Question 11

The purpose of the Trading Desk of the Federal Reserve Bank of New York is to buy stocks for member commercial banks. 
 ​

Accepted Answer

A) True 
 B)False

Question 12

The advisory committee making recommendations to the Fed about economic and banking issues is the

Accepted Answer

A) Community Advisory Council. 
B) Community Depository Institutions Advisory Council. 
C) Federal Advisory Council. 
D) None of these are correct. 
A) Community Advisory Council. 
B) Community Depository Institutions Advisory Council. 
C) Federal Advisory Council. 
D) None of these are correct.

Question 13

All commercial banks are required to be members of the Fed.

Accepted Answer

A) True 
 B)False

Question 14

The purchase of government securities by someone other than the Fed results in ​

Accepted Answer

A) an overall increase in funds among commercial banks. 
B) an overall decrease in funds among commercial banks. 
C) offsetting changes in funds at commercial banks. 
D) an increase in securities maintained by the Fed. 
A) an overall increase in funds among commercial banks. 
B) an overall decrease in funds among commercial banks. 
C) offsetting changes in funds at commercial banks. 
D) an increase in securities maintained by the Fed.

Question 15

The voting members of the Federal Open Market Committee consist of the Board of Governors plus the ​

Accepted Answer

A) President of the United States. 
B) presidents of the 12 Fed district banks. 
C) presidents of 5 Fed district banks. 
D) Federal Advisory Council. 
A) President of the United States. 
B) presidents of the 12 Fed district banks. 
C) presidents of 5 Fed district banks. 
D) Federal Advisory Council.

Question 16

The ____ is made up of seven individual members, and each member is appointed by the President of the United States.

Accepted Answer

A) Board of Governors 
B) Federal Reserve district bank 
C) Federal Open Market Committee (FOM
C)  
D) Securities and Exchange Commission 
A) Board of Governors 
B) Federal Reserve district bank 
C) Federal Open Market Committee (FOM
C)  
D) Securities and Exchange Commission

Question 17

Which of the following were purchased by the Fed as part of its quantitative easing during the credit crisis?

Accepted Answer

A) mortgage-backed securities 
B) commercial paper 
C) bonds backed by consumer loans, automobile loans, and credit card loans 
D) All of the above were purchased as part of quantitative easing. 
A) mortgage-backed securities 
B) commercial paper 
C) bonds backed by consumer loans, automobile loans, and credit card loans 
D) All of the above were purchased as part of quantitative easing.

Question 18

The main purpose of the Fed's lending facility is to control the money supply.

Accepted Answer

A) True 
 B)False

Question 19

All ____ are required to be members of the Federal Reserve System.

Accepted Answer

A) state banks 
B) national banks 
C) savings and loan associations 
D) finance companies 
E) state banks AND national banks 
A) state banks 
B) national banks 
C) savings and loan associations 
D) finance companies 
E) state banks AND national banks

Question 20

The ____ is directly responsible for conducting monetary policy. ​

Accepted Answer

A) Federal Advisory Council 
B) FOMC 
C) Senate 
D) President of the United States 
A) Federal Advisory Council 
B) FOMC 
C) Senate 
D) President of the United States

Exam 4: Functions of the Fed

The federal funds rate is the rate at which the Fed lends money directly to member banks. ​

When the Fed sells securities, the total funds of commercial banks ____ by the market value of the securities sold by the Fed. This activity initiated by the FOMC's policy directive is referred to as a ____ of money supply growth.

The primary credit rate is the interest rate that the Fed charges the most creditworthy depository institutions for short-term loans.

The Trading Desk is sometimes directed to ____ a sufficient amount of Treasury securities to ____ the federal funds rate to a new targeted level set by the FOMC.

The chief objective of the European Central Bank is ____ in the countries of the eurozone.

The Board of Governors is composed of ​

Which of the following is currently a main role of the Federal Reserve's Board of Governors?

Which of the following is NOT an activity of Fed district banks?

The the reserve requirement ratio, the the ultimate effect of any initial increase in the money supply.

The ____ is directly responsible for setting reserve requirements. ​

The purpose of the Trading Desk of the Federal Reserve Bank of New York is to buy stocks for member commercial banks. ​

The advisory committee making recommendations to the Fed about economic and banking issues is the

All commercial banks are required to be members of the Fed.

The purchase of government securities by someone other than the Fed results in ​

The voting members of the Federal Open Market Committee consist of the Board of Governors plus the ​

The ____ is made up of seven individual members, and each member is appointed by the President of the United States.

Which of the following were purchased by the Fed as part of its quantitative easing during the credit crisis?

The main purpose of the Fed's lending facility is to control the money supply.

All ____ are required to be members of the Federal Reserve System.

The ____ is directly responsible for conducting monetary policy. ​

Role of Financial Markets and Institutions

Determination of Interest Rates

Structure of Interest Rates

Monetary Policy

Money Markets

Bond Markets

Bond Valuation and Risk

Mortgage Markets

Stock Offerings and Investor Monitoring

Stock Valuation and Risk

Market Microstructure and Strategies

Financial Futures Markets

Options Markets

Swap Markets

Foreign Exchange Derivative Markets

Commercial Bank Operations

Bank Regulation

Bank Management

Bank Performance

Thrift Operations

Finance Company Operations

Mutual Fund Operations

Securities Operations

Insurance and Pension Fund Operations

Pension Fund Operations

Filters

The federal funds rate is the rate at which the Fed lends money directly to member banks.

When the Fed sells securities, the total funds of commercial banks by the market value of the securities sold by the Fed. This activity initiated by the FOMC's policy directive is referred to as a of money supply growth.

The Trading Desk is sometimes directed to a sufficient amount of Treasury securities to the federal funds rate to a new targeted level set by the FOMC.

The Board of Governors is composed of

The ____ is directly responsible for setting reserve requirements.

The purpose of the Trading Desk of the Federal Reserve Bank of New York is to buy stocks for member commercial banks.

The purchase of government securities by someone other than the Fed results in

The voting members of the Federal Open Market Committee consist of the Board of Governors plus the

The ____ is directly responsible for conducting monetary policy.