Functions Of The Fed

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Question 1
Free
Multiple Choice

Which of the following is not a major component of the Federal Reserve System?

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A

member banks

B

Federal Open Market Committee

C

Securities and Exchange Commission

D

Board of Governors

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Question 2
Free
Multiple Choice

As a result of the Financial Reform Act of 2010, the ____ was established to regulate financial products and services.

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A

Federal Advisory Committee

B

Federal Open Market Committee

C

Consumer Financial Protection Bureau

D

Board of Governors

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Question 3
Free
Multiple Choice

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

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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

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Question 4
Free
Multiple Choice

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

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A

state banks

B

national banks

C

savings and loan associations

D

finance companies

E

A and B

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Question 5
Free
Multiple Choice

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

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A

Board of Governors

B

Federal Reserve district bank

C

Federal Open Market Committee (FOMC)

D

Securities and Exchange Commission

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Question 6
Multiple Choice

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

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A
regulating commercial banks
B
regulating foreign trade
C
controlling monetary policy
D
A and C
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Question 7
Multiple Choice

With regard to monetary policy, which of the following is under the direct control of the Federal Reserve's Board of Governors?

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A
revising reserve requirements for depository institutions
B
authorizing changes in the amount of borrowing by the Treasury
C
monitoring the stock market for insider trading
D
monitoring the derivatives market for illegal trading strategies
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Question 8
Multiple Choice

The ____ rate is the interest rate charged on the Fed's short-term loans to depository institutions.

Choose correct answer/s
A
federal funds
B
prime
C
primary credit lending
D
real
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Question 9
Multiple Choice

Which of the following is an action that the Fed uses to increase or decrease the money supply?

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A
buying or selling Treasury securities in the secondary market
B
adjusting the tax rate imposed on income earned on Treasury securities
C
adjusting the coupon rate on Treasury bonds
D
selling Treasury securities in the primary market
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Question 10
Multiple Choice

Total funds of commercial banks will initially ____ by the dollar amount of securities ____ by the Fed.

Choose correct answer/s
A
increase; purchased
B
increase; sold
C
decrease; purchased
D
A and B
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Question 11
Multiple Choice

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

Choose correct answer/s
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.
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Question 12
Multiple Choice

As the supply of funds in the banking system ____ , the federal funds rate ____ .

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A
increases; declines
B
increases; increases
C
declines, declines
D
none of the above
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Question 13
Multiple Choice

Repurchase agreements are purchased by the Fed to

Choose correct answer/s
A
temporarily decrease the aggregate level of bank funds.
B
permanently increase the aggregate level of bank funds.
C
permanently decrease the aggregate level of bank funds.
D
temporarily increase the aggregate level of bank funds.
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Question 14
Multiple Choice

When open market operations are used to ____ bank funds, the yield on debt instruments ____ .

Choose correct answer/s
A
reduce; decreases
B
reduce; increases
C
increase; increases
D
none of the above
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Question 15
Multiple Choice

____ open market operations offset the impact of other conditions that affect the level of funds.

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A
Active
B
Passive
C
Dynamic
D
Defensive
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Question 16
Multiple Choice

Credit may be used for any purpose and is available only to depository institutions that meet specific requirements for financial soundness.

Choose correct answer/s
A
Primary
B
Secondary
C
Tertiary
D
None of the above
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Question 17
Multiple Choice

To decrease the money supply, the Fed could the reserve requirement ratio.

Choose correct answer/s
A
increase
B
stabilize
C
reduce
D
eliminate
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Question 18
Multiple Choice

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

Choose correct answer/s
A
lower; less
B
lower; greater
C
greater; less
D
B and C
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Question 19
Multiple Choice

The is directly responsible for controlling money supply growth.

Choose correct answer/s
A
Federal Advisory Council
B
FOMC
C
Board of Governors
D
President of the United States
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Question 20
Multiple Choice

Assume that the reserve requirements ratio is 15 percent. An initial injection of $150 million could result in a maximum change in the money supply of

Choose correct answer/s
A
$150 million.
B
$1 billion.
C
$1 million.
D
$22.5 million.
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