Question 1

The Federal Reserve entity that determines monetary policy strategy is the

Accepted Answer

A)  Board of Governors.
B)  Federal Open Market Committee.
C)  Chairman of the Board of Governors.
D)  Shadow Open Market Committee.

Question 2

Bank panics in 1819, 1837, 1857, 1873, 1884, 1893, and 1907 convinced many that

Accepted Answer

A)  the Federal Reserve needed greater control over the banking system.
B)  the Federal Reserve needed greater authority to deal with problem banks.
C)  a central bank was needed to prevent future financial panics.
D)  both A and B of the above.

Question 3

The power within the Federal Reserve was effectively transferred to the Board of Governors by

Accepted Answer

A)  the banking legislation of the Great Depression.
B)  Supreme Court decisions in the 1950s.
C)  the Depository Institutions Deregulation and Monetary Control Act of 1980.
D)  the Treasury-Federal Reserve Accord of 1951.

Question 4

Advocates of Fed independence fear that subjecting the Fed to direct presidential or congressional control would

Accepted Answer

A)  impart an inflationary bias to monetary policy.
B)  force monetary authorities to sacrifice the long-run objective of price stability.
C)  make the so-called political business cycle even more pronounced.
D)  do all of the above.
E)  do only A and B of the above.

Question 5

According to the theory of bureaucratic behavior, the objective of bureaucracy is

Accepted Answer

A)  to maximize its own welfare, meaning that it seeks additional power and prestige.
B)  to maximize consumers' surplus, meaning that it seeks additional regulatory powers.
C)  to protect the industry it regulates, meaning that it seeks additional regulatory powers.
D)  none of the above.

Question 6

Each member of the seven-member Board of Governors is appointed by the president and confirmed by the Senate to serve

Accepted Answer

A)  4-year terms.
B)  6-year terms.
C)  14-year terms.
D)  as long as the appointing president remains in office.

Question 7

Former Congressman Jack Kemp reportedly once said that he wanted to become the most powerful man in Washington, D.C.the chairman of the Board of Governors of the Federal Reserve System. What does Representative Kemp's comment imply about the power of the chairman of the Federal Reserve? Do you think he may have been exaggerating? Explain.

Accepted Answer

The answer of Former Congressman Jack Kemp reportedly once said...

Question 8

Nationwide financial panics in 1873, 1884, 1893, and 1907 might have been avoided had

Accepted Answer

A)  the First Bank of the United States served its intended role of lender of last resort.
B)  the Second Bank of the United States not been abolished in 1836 by President Andrew Jackson.
C)  the Second Bank of the United States served its intended role of lender of last resort.
D)  the Federal Reserve served its intended role of lender of last resort. B

Question 9

Rapid money supply growth and uncontrollable inflation were among the factors which motivated the creation of the Federal Reserve System.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following central banks has the greatest degree of independence?

Accepted Answer

A)  Bank of England
B)  European Central Bank
C)  Bank of Japan
D)  Federal Reserve System

Question 11

Discuss similarities and differences between Ben Bernanke and Alan Greenspan in their respective roles as chairman of the Federal Reserve Board.

Accepted Answer

The answer of Discuss similarities and differences between Ben Bernanke...

Question 12

Federal Reserve monetary policy decisions must be approved by the Secretary of the Treasury before they may be implemented.

Accepted Answer

A) True 
 B)False

Question 13

The unusual structure of the Federal Reserve System is perhaps best explained by

Accepted Answer

A)  Americans' fear of centralized power.
B)  the traditional American distrust of moneyed interests.
C)  Americans' desire to remove control of the money supply from the U.S. Treasury.
D)  all of the above.
E)  only A and B of the above.

Question 14

Suppose legislation requiring the Fed to keep the inflation rate between 1.5% and 2.5% per year is passed by Congress. This law restricts the Fed's

Accepted Answer

A)  instrument independence.
B)  goal independence.
C)  both A and B of the above.
D)  neither A nor B of the above.

Question 15

The Washington, D.C. Fed bank, with over 30 percent of the system's assets, is the most important Federal Reserve Bank.

Accepted Answer

A) True 
 B)False

Question 16

What is the theory of bureaucratic behavior? What types of behavior does it predict the Fed might undertake?

Accepted Answer

The answer of What is the theory of bureaucratic behavior?...

Question 17

Describe the structure and responsibility for policy tools in The Federal Reserve System.

Accepted Answer

The answer of Describe the structure and responsibility for policy...

Question 18

The FOMC does not actually carry out securities purchases or sales.

Accepted Answer

A) True 
 B)False  True

Question 19

Which Federal Reserve Bank president always has a vote in the Federal Open Market Committee?

Accepted Answer

A)  Philadelphia
B)  New York
C)  Boston
D)  San Francisco

Question 20

According to the textbook authors, the Fed is

Accepted Answer

A)  remarkably free of the political pressures that influence other government agencies.
B)  more responsive to the political pressures that influence other government agencies.
C)  probably somewhat constrained in its policymaking by the congressional threat to reduce Fed independence.
D)  both A and C of the above. D

Exam 9: Central Banks and the Federal Reserve System

The Federal Reserve entity that determines monetary policy strategy is the

Correct Answer
verified

Bank panics in 1819, 1837, 1857, 1873, 1884, 1893, and 1907 convinced many that

Correct Answer
verified

The power within the Federal Reserve was effectively transferred to the Board of Governors by

Correct Answer
verified

Advocates of Fed independence fear that subjecting the Fed to direct presidential or congressional control would

Correct Answer
verified

According to the theory of bureaucratic behavior, the objective of bureaucracy is

Correct Answer
verified

Each member of the seven-member Board of Governors is appointed by the president and confirmed by the Senate to serve

Correct Answer
verified

Correct Answer
verified

Nationwide financial panics in 1873, 1884, 1893, and 1907 might have been avoided had

Correct Answer
verified
B

Rapid money supply growth and uncontrollable inflation were among the factors which motivated the creation of the Federal Reserve System.

Correct Answer
verified

Which of the following central banks has the greatest degree of independence?

Correct Answer
verified

Discuss similarities and differences between Ben Bernanke and Alan Greenspan in their respective roles as chairman of the Federal Reserve Board.

Correct Answer
verified

Federal Reserve monetary policy decisions must be approved by the Secretary of the Treasury before they may be implemented.

Correct Answer
verified

The unusual structure of the Federal Reserve System is perhaps best explained by

Correct Answer
verified

Suppose legislation requiring the Fed to keep the inflation rate between 1.5% and 2.5% per year is passed by Congress. This law restricts the Fed's

Correct Answer
verified

The Washington, D.C. Fed bank, with over 30 percent of the system's assets, is the most important Federal Reserve Bank.

Correct Answer
verified

What is the theory of bureaucratic behavior? What types of behavior does it predict the Fed might undertake?

Correct Answer
verified

Describe the structure and responsibility for policy tools in The Federal Reserve System.

Correct Answer
verified

The FOMC does not actually carry out securities purchases or sales.

Correct Answer
verified
True

Which Federal Reserve Bank president always has a vote in the Federal Open Market Committee?

Correct Answer
verified

According to the textbook authors, the Fed is

Correct Answer
verified
D

Exam 9: Central Banks and the Federal Reserve System

The Federal Reserve entity that determines monetary policy strategy is the

Correct AnswerverifiedShow Answer

Bank panics in 1819, 1837, 1857, 1873, 1884, 1893, and 1907 convinced many that

Correct AnswerverifiedShow Answer

The power within the Federal Reserve was effectively transferred to the Board of Governors by

Correct AnswerverifiedShow Answer

Advocates of Fed independence fear that subjecting the Fed to direct presidential or congressional control would

Correct AnswerverifiedShow Answer

According to the theory of bureaucratic behavior, the objective of bureaucracy is

Correct AnswerverifiedShow Answer

Each member of the seven-member Board of Governors is appointed by the president and confirmed by the Senate to serve

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Nationwide financial panics in 1873, 1884, 1893, and 1907 might have been avoided had

Correct AnswerverifiedB

Rapid money supply growth and uncontrollable inflation were among the factors which motivated the creation of the Federal Reserve System.

Correct AnswerverifiedShow Answer

Which of the following central banks has the greatest degree of independence?

Correct AnswerverifiedShow Answer

Discuss similarities and differences between Ben Bernanke and Alan Greenspan in their respective roles as chairman of the Federal Reserve Board.

Correct AnswerverifiedShow Answer

Federal Reserve monetary policy decisions must be approved by the Secretary of the Treasury before they may be implemented.

Correct AnswerverifiedShow Answer

The unusual structure of the Federal Reserve System is perhaps best explained by

Correct AnswerverifiedShow Answer

Suppose legislation requiring the Fed to keep the inflation rate between 1.5% and 2.5% per year is passed by Congress. This law restricts the Fed's

Correct AnswerverifiedShow Answer

The Washington, D.C. Fed bank, with over 30 percent of the system's assets, is the most important Federal Reserve Bank.

Correct AnswerverifiedShow Answer

What is the theory of bureaucratic behavior? What types of behavior does it predict the Fed might undertake?

Correct AnswerverifiedShow Answer

Describe the structure and responsibility for policy tools in The Federal Reserve System.

Correct AnswerverifiedShow Answer

The FOMC does not actually carry out securities purchases or sales.

Correct AnswerverifiedTrue

Which Federal Reserve Bank president always has a vote in the Federal Open Market Committee?

Correct AnswerverifiedShow Answer

According to the textbook authors, the Fed is

Correct AnswerverifiedD

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B

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True

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D