Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
60. The information contained in the Fed’s blue and green books is released to the public:
A. Immediately after the FOMC meeting in which they are used
61. A typical FOMC meeting would best be described as:
A. An informal meeting with significant give and take among participants
62. The real power in the FOMC lies with:
A. The President of the New York Fed Bank
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
63. Once the FOMC meetings adjourn, the public is made aware of the FOMC’s decision:
D. Twenty-four hours after the meeting adjourns
64. Once the FOMC announces the result of its meeting the attendees:
A. It must brief the financial news immediately after and answer questions posed to them
65. Criteria used to judge a central bank’s independence include each of the following,
except:
A. Budgetary independence
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
66. The Fed’s revenue comes:
A. From Congressional appropriation
67. Most of the Fed’s income is:
A. Paid to member banks in the form of a dividend
68. The interest rate changes that result from the FOMC meetings:
A. Can be altered only by Congress
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
69. A large step toward independence occurred for the Fed in 1935 when the:
D. Fed was given the ability to control its own budget
70. During World War II, the Fed accommodated the war effort by:
D. Curtailing credit and keeping bond prices high
71. Which of the following statements best completes the following: “The Fed’s independence
can only be revoked by ¼”?
A. The U.S. President
72. The likelihood that the Fed will implement a change that will seriously harm the economy
is minimized by the fact that:
A. Only bright, well-intentioned people are appointed to key roles at the Fed
73. The objectives set for the Fed by Congress are:
D. Specific on the growth rate for the economy, but vague on all other objectives
74. One valuable lesson investors should learn from the stock market behavior during the late
1990s and early 2000s is that the Fed:
A. Can control the stock market
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
75. Which statement best completes the following sentence; “The U.S. dollar is to the fifty
states as the euro is to¼.”?
D. The European System of Central Banks
76. The Agreement to form a European monetary union was formalized in the Treaty of:
D. Milan
77. By 2007, the euro had become the currency of:
D. All European countries except Great Britain
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
78. Comparing the European and the U.S. central bank systems, the National Central Banks
that make up part of the European System of Central Banks resembles:
A. The U.S. Treasury
79. Comparing the European and the U.S. central bank systems, the Executive Board of the
D. The Chairman of the Board of Governors of the Fed
80. Comparing the European and the U.S. central bank systems, the Governing Council of the
European system resembles:
A. The Board of Governors
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
81. Executive board members of the European System of Central Banks are appointed by:
D. The directors of the National Central Banks
82. The Treaty of Maastricht was signed in:
A. 1999
83. Member countries of the Euro system agree to:
A. Pursue independent domestic monetary policies based on what is best for their own
country, but not all member countries have adopted the euro as their currency
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
84. In the meetings of the Governing Council of the European Central Bank, formal votes
are:
D. Taken and released two years after the meetings
85. Great Britain is:
D. A member of both the European Union and the Euro system
86. France, Germany, and Italy are:
D. Not members of either the Euro system or the European Union; they have their own
economic union
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
87. As of 2010, the euro had become the currency for:
A. 7 countries
88. The European Central Bank has ensured independence by appointing Executive Board
members for:
D. Twenty-year terms
89. The European Central Bank has ensured independence by:
D. Not taking votes on policy matters
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
90. A national central bank of a country that belongs to the European Union but does not
participate in the monetary union would:
A. Not be a part of the European System of Central Banks
91. One key difference concerning the communications from the Fed’s FOMC and the
European Systems Governing Council is:
D. The statement from the FOMC is typically longer and more detailed than that from the
Governing Council
92. The ECB’s Governing Council has price stability as a primary objective. It has defined
price stability as:
A. A zero rate of inflation
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
93. The method used by the ECB to measure inflation for meeting its objectives:
A. Gives equal weight to each member country
94. The make-up of the Governing Council of the European Central Bank and the methods
used to calculate price stability for the monetary system can potentially result in:
A. Small countries having undue influence on the decisions of the Council
95. Now that Ireland is a member of the Euro system it is likely to find that the monetary
policy that affects it:
D. Has the goal of zero inflation for Ireland
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
96. Comparing the FOMC and the ECB’s Governing Council:
A. The cooperation with fiscal policymakers is the same for both
97. Based on the membership of the Euro system in 2007, the median country is likely to be:
D. Growing more rapidly than the others
Short Answer Questions
98. Why did it take almost 150 years before the U.S. had a permanent central bank?
Chapter 16 – The Structure of Central Banks: The Federal Reserve and the European Central Bank
99. What are the three branches that make up the Federal Reserve System?
100. Why are so few state chartered banks members of the Federal Reserve System?
101. How are the locations of the twelve regional Federal Reserve Banks and the
corresponding districts explained?