80) Elections to the boards of directors of Federal Reserve district banks _____

Question

80) Elections to the boards of directors of Federal Reserve district banks
______

A) have a sizeable impact on the conduct of monetary policy.

B) were abolished in 1985.

C) typically involve only one candidate per position.

D) have greatly increased in importance over the years.



81) How does the reserve policy of the European Central Bank (ECB) differ from the reserve policy of the Fed?

A) The ECB pays interest on reserve balances.

B) The ECB does not apply reserve requirements to checkable deposits.

C) The ECB has a required reserve ratio of 100%.

D) The ECB applies the same required reserve ratio to all banks and all deposits.



82) Congress established the FOMC because

A)

a group was needed to set reserve requirements for member banks.

B)

a group was needed to coordinate the setting of discount rates by the district banks.

C)

Congress was attempting to expand its influence within the Federal Reserve System.

D)

of a lack of coordination among district banks in carrying out open market operations.



83)

Fed officials have argued that deregulation and financial innovation during the 1980s

A)

have made M1 less relevant as a measure of the medium of exchange.

B)

have led to an increase in the volatility of interest rates.

C)

have made using free reserves as an operating target more desirable.

D)

have led to higher inflation.



84) The equilibrium exchange rate

A)

is determined monthly by the International Monetary Fund.

B)

is determined by the relative amounts of gold contained in each country's currency.

C)

makes investors indifferent between holding domestic and foreign assets.

D)

in the short run reflects the relative purchasing power of each country's currency.



85) Required reserves are:

A)

zero on NOW accounts.

B)

imposed on all deposits at commercial banks.

C)

a tax on bank intermediation.

D)

zero on demand deposits.



86)

When did the charter of the Second Bank of the United States expire?


A) 1863

B) 1993

C) 1791

D) 1836

87) Which of the following did NOT occur as a result of the weakness of the Fed's actions during the banking crisis of the early 1930s?

A)

Congress amended the Fed's charter to broaden the permissible collateral for discount loans.

B)

A federal system of deposit insurance was introduced.

C)

Congress amended the Fed's charter to limit the convertibility of dollars into gold.

D)

Congress amended the Fed's charter to require it to make discount loans to any banks requesting them.


88) In which of the following countries has the Bank of China NOT shown significant expansion?

A)

The United States

B)

Hong Kong

C)

Russia

D)

Canada


89)

Which of the following statements is correct?


______

A)

The discount rate is determined by market forces.

B)

Decisions by both banks and the Fed determine the volume of discount loans.

C)

The discount rate is typically greater than other short-term market interest rates.

D)

The Fed's control over discount lending is more complete than its control over open market operations.



90)

The part of bank reserves deposited at the Fed are

______

A)

liabilities for both the Fed and banks.

B)

assets for both the Fed and banks.

C)

assets for banks and liabilities for the Fed.

D)

assets for the Fed and liabilities for banks.



91)

During the early 1980s, Paul Volcker argued that the Fed could not


A)

increase money supply growth until the Treasury's borrowing increased.

B)

decrease money supply growth until interest rates were higher.

C)

increase money supply growth until the federal budget deficit was reduced.

D)

decrease money supply growth until the federal budget deficit was reduced.

Explanation / Answer

D) have greatly increased in importance over the years. D) The ECB applies the same required reserve ratio to all banks and all deposits. B) a group was needed to coordinate the setting of discount rates by the district banks. C) have made using free reserves as an operating target more desirable. D) in the short run reflects the relative purchasing power of each country's currency. B) imposed on all deposits at commercial banks. D) 1836 B) Hong Kong B) Decisions by both banks and the Fed determine the volume of discount loans. C )assets for the Fed and liabilities for banks. D) decrease money supply growth until the federal budget deficit was reduced.

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