Money & Banking Chapter 15 The Federal Reserve System – Flashcards

Federal Reserve bank

The Federal Reserve

The board of directors of a Federal Reserve bank

The Board of Governors

The chairman of the Board of Governors

current chairman

most recent chairman

chairman with highest interest rate reduction

open-market operations

The Federal Open Market Committee (FOMC)

Monetary policy

federal funds rate

primary government securities dealers

repurchase agreements (repos)

political business cycle

Number of board of governors on FOMC

Number of Federal Reserve Bank presidents on FOMC

Number of Federal Reserve Regional Banks

basis point

The directors of each Federal Reserve Bank are bankers from the particular district. T/F

The Board of Governors of the Federal Reserve System determines monetary policy for the economy. T/F

The Chair of the Board of Governors has a 4-year renewable appointment. T/F

The largest reduction in inflation since 1958 occurred during the chairmanship of Paul Volcker. T/F

The President of which Federal Reserve Bank is always a voting member of the FOMC? 1. President of the Boston Federal Reserve Bank. 2. President of the New York City Federal Reserve Bank. 3. President of the Philadelphia Federal Reserve Bank. 4. President of the Chicago Federal Reserve Bank.

If members of the Board of Governors can be appointed for one 14-year nonrenewable term, how did William M. Martin, Jr. and Alan Greenspan each serve as chair of the Board for over 18 years? 1. Both Martin and Greenspan were considered such great chairs that Congress granted them an extension. 2. The chair of the Board is exempt from the 14-year non-renewable term rule. 3. The served the remaining years of an un-expired term before being appointed to a 14-year term. 4. The Chair of the Board of Governors is appointed by the President with the consent of the Senate.

The Federal Reserve-Treasury Accord established which of the following 1. The support of the price of Treasury bonds by Fed open market policy. 2. The joint responsibility of the Fed and the Treasury for monetary policy. 3. Independence of the Fed in that it no longer supported the value of Treasury securities. 4. The agreement by the Fed to serve as the Treasury's banker.

Which of the following describes a 50 basis point increase in the federal funds rate? 1. The federal funds rate increases by five percent. 2. The federal funds rate increases by 50 percent. 3. The federal funds rate increases by 50 percent relative to the base federal funds rate. 4. The federal funds rate increases by one-half of a percentage point.

Which of the following are central banking activities of the district Federal Reserve Banks? 1. Economic research. 2. Discount window lending. 3. Ensuring that banks comply with laws relating to community reinvestment. 4. All of the above are central banking activities of the district Federal Reserve Banks.

Which of the following is an example of how the independence of the Fed is maintained? 1. The President of the U.S. appoints all members of the Board. 2. Board members have 14-year non-renewable terms. 3. The district bank's directors, subject to approval by the Board, elect president of district Federal Reserve Banks to 5-year terms. 4. Both 2. and 3. reflect how members of the FOMC are insulated from influence.

Each of the following helps the Federal Reserve to be independent of the federal government except the fourteen-year terms of the governors. the establishment of the Fed in the Constitution. the staggered terms of the governors. the independence of the Fed's income.

The interest rate on short-term loans between banks is known as the primary credit discount rate. federal funds rate. commercial paper rate. T-bill rate.

The federal funds rate is the interest rate on loans to banks from the Fed. loans by banks to the Fed. short-term loans between banks. Treasury bills.

The ____ appoints a chairman of the Federal Reserve Board of Governors to a ____, ____ term as chairman. President of the United States; non-renewable; fourteen-year Board of Directors; renewable; five-year U.S. Senate; non-renewable; seven-year President of the United States; renewable; four-year

When monetary policy eases before elections to favor incumbent politicians, there is said to be credibility. an expectations trap. a diffusion of power. a political business cycle.

Federal Reserve Banks are located in each of the following cities except Richmond. Denver. Kansas City. St. Louis.

Voting members of the FOMC include the seven Federal Reserve governors, the presidents of the Federal Reserve Banks of New York, San Francisco, and Chicago, and the presidents of four other Federal Reserve Banks, on a rotating basis. five of the seven Federal Reserve governors and the presidents of five Federal Reserve Banks on a rotating basis. all of the Federal Reserve governors and the presidents of all Federal Reserve Banks. the seven Federal Reserve governors, the president of the Federal Reserve Bank of New York, and the presidents of four other Federal Reserve Banks on a rotating basis.

Federal Reserve Banks are owned by the U.S. government. banks that are members of the Federal Reserve System. the governments of the states in which they are located. private citizens who own stock in them.

Federal Reserve Banks pay for their central banking operations through government tax revenue. interest on the securities they own. fees charged to banks that use their services. dividends paid by local banks.

There are ____ Federal Reserve Banks. seven ten twelve fifteen

When the Fed engages in an overnight repurchase agreement (a repo) a bank agrees to hold a certain amount of clearing balances at the Fed. a primary government securities dealer agrees to buy a security from the Fed one day and sell it back the next day. a primary government securities dealer agrees to sell a security to the Fed one day and buy it back the next day. The Fed repossesses property that a bank owns as punishment for the bank's failure to pay off a discount loan.

In 2006, Chairman Greenspan left the Fed because President Bush wanted him to resign. he reached mandatory retirement age. his term as Governor expired. his term as Chairman expired.

When the Fed engages in open-market operations, the transactions are conducted by the Open Market Desk at the Federal Reserve Bank of New York. the Open Market Desk at the Federal Reserve Board in Washington, D.C. the National Bureau of Economic Research. the Federal Open Market Committee.

The chairman of the Federal Reserve Board who reduced the inflation rate from over 10 percent to about 3 percent in the early 1980s was Arthur Burns. G. William Miller. Paul Volcker. Alan Greenspan.

The main advisors of the Chairman of the Federal Reserve Board of Governors are the directors of the three staff divisions. the Council of Economic Advisors. the U.S. Treasury Department. private economists hired as consultants.

The Federal Reserve's main source of income is fees charged to banks. funds budgeted by Congress. fees charged to the public every time they use an ATM. income from interest on the government securities it owns.

Of the nine directors of each Federal Reserve Bank, ____ are elected by member banks. zero three six nine

The Federal Reserve publication that discusses forecasts for the economy is known as the Redbook. Beigebook. Bluebook. Greenbook.

One half of a percentage point equals ____ basis points. 0.5 5 50 500

Open-market operations are purchases and sales of government securities in the secondary market. government securities in the primary market. corporate bonds in the secondary market. corporate bonds in the primary market.

The Open Market Desk is located at the Board of Governors. the Federal Reserve Bank of Philadelphia. the Federal Reserve Bank of New York. the Federal Reserve Bank of Chicago.

Expenditures of each Federal Reserve Bank are approved by the U.S. Senate. the President of the United States. the U.S. Treasury Department. the Federal Reserve Board of Governors.

How long is the normal term in office for a Governor of the Federal Reserve Board? Five years Seven years Fourteen years Life