Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
1. The Federal Reserve was created in:
D. 1945
2. The Federal Reserve System is composed of:
A. Five branches with clear responsibilities
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
3. Member banks of the Federal Reserve System include:
4. The three branches of the Federal Reserve System include each of the following, except:
D. The twelve regional Federal Reserve Banks
5. Considering state chartered banks:
A. Most elect to join the Federal Reserve System
6. Prior to 1980:
A. Member banks of the Federal Reserve did not have to hold non-interest-bearing reserve
deposits at the Fed
7. Currently the requirement of holding a non-interest-bearing reserve account at the Fed must
be met by:
D. Only nationally chartered banks
8. One reason it took so long to have a central bank in the United States is that:
D. All of the above
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
9. The number of regional Federal Reserve Banks is:
A. Nine
10. The largest of the regional Federal Reserve Banks is located in:
A. Washington D.C
11. The Federal Reserve Bank of New York is unique from other Reserve banks because it:
A. Is the only regional Bank that serves just one state
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
12. The lines drawn to establish Federal Reserve Districts were based on:
A. Solely population distribution in 1914
D. The districts are divided with equal population
14. The Reserve Banks of the Federal Reserve System are owned by:
A. The taxpayers in their districts
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
15. How many members belong to the board of directors for each of the Reserve Banks of the
Fed?
D. Fourteen
16. Each of the Reserve Banks has a president who is:
D. Selected from the Board of Directors
17. Each president of a Reserve Bank serves for a:
D. Two-year renewable term
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
18. Which of the following is a false statement about the structure of the Federal Reserve
System?
19. In its role as bank for the U.S. government, the Federal Reserve performs all of the
following services, except:
D. Managing U.S. Treasury borrowings
20. In its role as the bankers’ bank, the Federal Reserve performs all of the following services,
except:
A. Collecting and making available data on business conditions
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
21. Which of the following cities does not have a Federal Reserve Bank located in it?
D. Chicago
22. Which of the following cities has a Federal Reserve Bank located in it?
D. Miami
23. The Federal Reserve District that covers the largest geographic area is serviced by the
Bank located in:
A. Chicago
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
24. The services the Federal Reserve provides to foreign central banks and other international
organizations are handled:
A. Directly by the Board of Governors in Washington D.C
25. The largest Federal Reserve District geographically is serviced by:
D. The districts are divided fairly equally
26. Buying and selling U.S. Treasury Securities for the Fed’s own portfolio is called:
A. Managing the float
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
27. The Federal Reserve banks play a role in formulating monetary policy by each of the
D. Making discount loans
28. How many members are on the Board of Governors of the Federal Reserve System?
D. Fourteen
29. Current law regarding the Fed’s Board of Governors stipulates that:
A. No more than three governors can come from the same district
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
30. The Governors of the Federal Reserve System are appointed by the:
A. Member banks from their home district
31. To ensure that the Board of Governors is not unduly influenced by any one President:
D. The Governors must be approved by both houses of Congress
32. The Governors of the Federal Reserve System serve terms of:
D. Seven years
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
33. To make sure the U.S. President cannot unduly influence the Board of Governors:
D. Only three governors can be replaced in any one year
34. The Chairman of the Board of Governors:
D. Serves an eight-year term
35. As a means to make sure the U.S. President cannot unduly influence the Chairman of the
Board of Governors:
D. The Chairman must be a Governor that was appointed to the Board by another president
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
36. The members of the Board of Governors in recent years have been all of the following,
except:
A. Former academic economists
37. The Board of Governors of the Fed performs each of the following functions, except:
A. Analyzing financial and economic conditions
38. The Federal Reserve Act explicitly requires that the Board of Governors represents each
of the following, except:
D. Agricultural interests
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
39. Members of the Board of Governors of the Fed:
A. Can be reappointed after their term expires
40. The Federal Reserve’s Open Market Committee currently meets:
A. Monthly
41. The Federal Open Market Committee began operating in:
A. 1913
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
42. The number of voting members on the Federal Open Market Committee is:
D. 8
43. Which of the following is (are) not a permanent voting member(s) on the FOMC?
D. The chair of the Board of Governors
44. The Chairman of the FOMC is:
A. The Secretary of the Treasury
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
45. The interest rate that the FOMC currently chooses to control is:
D. The prime rate
46. The federal funds rate is the interest rate:
D. The FDIC charges banks that need to borrow from it to meet depositor demands
47. The federal funds rate is stated as:
C. A rate that is automatically indexed to inflation
D. The current rate less the expected rate of inflation
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
48. The FOMC controls the real interest rate:
D. Only on an annual basis
49. Changes in the federal funds rate influence the economy’s growth rate through all of the
following except by:
A. Making it more or less attractive to people save
50. The primary purpose of meetings of the FOMC is to:
A. Set the required reserve rate
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
51. The policy directive that is produced from the FOMC meeting:
A. Details the exact amount of U.S. Treasury securities the System Open Market Account
Manager is to purchase or sell
52. The attendees at the FOMC meetings receive information prior to the meetings that is
contained in books with colorful names. The information that is released to the public prior to
the meetings is from the:
D. Beige and blue books but not the green book
53. As a result of the 2007-2009 financial crisis, which of the following has been proposed as
a change to the Federal Reserve?
D. Linking the FOMC to the US Treasury by making the Secretary of the Treasury a member
of the FOMC
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
54. Which of the following is responsible for invoking the Fed’s emergency powers?
D. A majority of the Federal Reserve Bank presidents
55. Which of the books used at the FOMC meetings contains anecdotal information collected
by the Federal Reserve Banks?
D. Both the beige and blue books
56. Which of the books used at the FOMC meetings the Board staff’s economic forecast for
the next few years?
A. The blue book
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
57. Which of the books used at the FOMC meetings contains a discussion of financial markets
and current policy options?
D. Both the beige and green books
58. Which of the books used at the FOMC meetings is/are treated as secret documents and not
released to the public until after a number of years have passed?
A. The blue book and the beige book
59. Which of the books used at the FOMC meetings can be characterized as less quantitative
than the other two?
D. The white paper released to the press