quiz 13 Flashcards
(16 cards)
Which of the following is NOT an entity of the Federal Reserve System?
The Comptroller of the Currency
The Federal Reserve Banks are ________ institutions since they are owned by the ________.
Quasi-public; private commercial banks in the district where the Reserve Bank is located
Member commercial banks have purchased stock in their district Fed banks; the dividend paid by that stock is limited by law to ________ percent annually.
Six
Which of the following functions is NOT performed by any of the twelve regional Federal Reserve Banks?
Setting interest rates payable on time deposits
Banks subject to reserve requirements set by the Federal Reserve System include ________.
All banks whether or not they are members of the Federal Reserve System
There are ________ members of the Board of Governors of the Federal Reserve System.
Seven
Members of the Board of Governors are ________.
Appointed by the president of the United States and confirmed by the Senate
Which of the following is a duty of the Board of Governors of the Federal Reserve System?
Setting margin requirements, the fraction of the purchase price of the securities that has to be paid for with cash
The Federal Reserve entity that makes decisions regarding the conduct of open market operations is the ________.
Federal Open Market Committee
The Federal Open Market Committee consists of the ________ members of the Board of Governors and ________ presidents of the regional Fed banks.
Seven; five
Members of Congress are able to influence monetary policy, albeit indirectly, through their ability to ________.
Propose legislation that would force the Fed to submit budget requests to Congress, as must other government agencies
The political business cycle refers to the phenomenon that just before elections, politicians enact ________ policies. After the elections, the bad effects of these policies (for example, ________ ) have to be counteracted with ________ policies.
Expansionary; a higher inflation rate; contractionary
The strongest argument for an independent Federal Reserve rests on the view that subjecting the Fed to more political pressures would impart ________.
An inflationary bias to monetary policy
Critics of the current system of Fed independence contend that ________.
The current system is undemocratic
The central bank which is generally regarded as the most independent in the world because its charter cannot be changed by legislation is the ________.
European Central Bank
Which of the following statements about central bank structure and independence is TRUE?
Both theory and experience suggest that more independent central banks produce better monetary policy
