Deck 3: The Federal Reserve System

Question 1

Almost all economists agree that the federal government can effectively regulate the economy by raising or lowering taxes and expenditures.

Answer 1

False

Question 2

Which of the following is NOT a function of the Federal Reserve?

A)levying a high tax on state bank notes
B)conducting bank examinations
C) handling the government's central banking function
D) determining whether banks can borrow money from the Federal Reserve

Answer 2

A

Question 3

One of the main functions of the Federal Reserve is to serve as a bank for other banks.

Answer 3

True

Question 4

Which of the following is NOT an example of an agency that is focused on making banking safe and mutually beneficial across international borders?

A)International Monetary Fund
B)President's Working Group on Financial Markets
C) Asia Pacific Economic Cooperation
D) Bank for International Settlement

Question 5

The "a" in CAMELS stands for

A)adverse feedback loop
B)annuity
C) asset transformation
D) asset adequacy

Question 6

The International Monetary Fund (IMF) works to promote economic growth among member countries.

Question 7

Which of the following is NOT part of the ongoing organizational structure of the Federal Reserve?

A)Primary Dealer Credit Facility
B)District Reserve Banks
C) Member Banks
D) Board of Governors

Question 8

The Truth in Lending Act prohibits bill collectors from using deceptive or abusive tactics.

Question 9

Which of the following attempts to protect the information that credit bureaus may collect?

A)Fair Debt Collection Act
B)Fair Credit Reporting Act
C) Truth in Lending Act
D) Equal Credit Opportunity Act

Question 10

By law, every bank in the United States must be part of the Federal Reserve System.

Question 11

Which of the following statements is NOT true?

A)Credit bureaus may not report information more than one year old.
B)A creditor may not use receipt of public assistance as a factor in determining creditworthiness.
C) If there is a billing dispute, creditors may not take adverse action until the dispute is resolved.
D) Bill collectors may not call debtors at odd hours.

Question 12

If the government restricts the flow of cash into the economy too severely,

A)businesses will have more money to invest.
B)consumers cannot afford to borrow.
C) employment will rise dramatically.
D) all of the above are true.

Question 13

____________________ policy involves adjusting budgetary deficits or surpluses to achieve desired economy goals.

Question 14

The Strength of Support Assessment (SOSA) report is a quarterly report filed by U.S. banks to summarize how each of the bank's branches is performing.

Question 15

The Uniform Bank Performance Report is an annual report issued to summarize the performance of international banks operating within the United States.

Question 16

The main goals of the Federal Reserve's ____________________ policy are to maintain economic growth, to stabilize prices, and to keep international payments flowing smoothly.

Question 17

An increase in money supply and incomes often causes prices to go up as well.

Question 18

A fixed exchange rate ties the monetary value of one country's currency to the valuation of another country's currency.

Question 19

Janet Yellen began her term as chair of the Federal Reserve in 2014.

Question 20

The rate of interest the Federal Reserve charges banks for short-term loans is called the

A)discount rate.
B)federal funds rate.
C) reserve requirement rate.
D) prime rate.

Question 21

What is sterilization and why is it significant?

Question 22

____________________ are a select group of 20 dealers that the Fed works with to buy and sell securities.

Question 23

The auditing arm of Congress that helps ensure that federal laws and policies are implemented properly is called the ____________________.

Question 24

What is a charter and why is it important to banks?

Question 25

The right of ____________________ allows a consumer to change his or her mind about a loan until midnight of the third business day following the signing of papers.

Question 26

The policy of "priming the pump," or cutting taxes to add jobs and stimulate business during an economic downturn is often referred to as ____________________ economics.

Question 27

Name the three tools developed by the Fed in 2007 to help manage monetary policy and deal with the financial crisis.

Question 28

If 1 euro = 1.4955 $US, how many euros will 750 $US buy?

Question 29

In general, what is the goal of fiscal policies?

Question 30

The ____________________, established in 1988, was responsible for communicating across agencies to help ensure a healthy stock market that inspired investor confidence.

Question 31

Briefly explain the term balance of payments.

Question 32

The Federal Reserve Bank of Chicago sponsors ____________________ to provide a cross section of ideas regarding issues that cut across many aspects of international banking.

Question 33

How many District Banks are in the Federal Reserve?

Question 34

A(n) ___________________ enables a currency to fluctuate based on market conditions.

Question 35

What agency issues a CAMELS rating and what is the purpose of the rating?

Question 36

Name four characteristics that the Equal Credit Opportunity Act prohibits considering when determining the creditworthiness of a consumer.

Question 37

How does the Fed try to keep consumers educated regarding their rights?

Question 38

If an Australian dollar is worth 0.8815 $US, how many Australian dollars would 900 $US buy?

Question 39

The ____________________ is the group that makes discount rate decisions.

Question 40

____________________ laws require that the details of lending agreements be specified in writing.

Question 41

​If monetary policy restricts the flow of money into an economy too severely, businesses may not be able to afford to borrow. What are the usual economic results of this?​

Question 42

The Federal Reserve Board shares enforcement of consumer protection laws with a number of other agencies. List three of the agencies.

Question 43

What is the Taylor rule?

Question 44

Name three functions performed by the Federal Reserve in its role as the government's bank.

Question 45

Why is monetary policy easier to use than fiscal policy to prompt adjustments to the economy?

Question 46

Briefly explain why the government might cut spending or raise taxes during a time when the economy is prospering.

Question 47

Describe how the Fed increases and decreases its reserves using open market operations.

Question 48

How does the Federal Reserve derive its income? Is any money appropriated to the Federal Reserve by the United States government?

Question 49

Explain how the Board of Governors is selected, the length of each member's term, and the purpose of the Board. Be sure to distinguish between the terms of the chair, the vice-chair, and governors.