Monetary Policy

Front

Which of the following best describes the ownership structure of the Federal Reserve (the Fed)?
Options:
It is privately owned by its member banks.
It is owned by the federal government.
It is owned by private individuals.
It is owned by state governments.

Back

It is privately owned by its member banks.

Front

What is the purpose of the FOMC’s eight meetings per year?

Back

To review the economy and evaluate factors such as trends in construction, wages, prices, employment, production, the stock market, and consumer spending.

Front

What is one of the main responsibilities of the Federal Reserve besides regulating banks?

Back

Maintaining the currency and the payments system

Front

Which of the following best describes the function of clearinghouses in the payments system? They process billions of checks written every year to ensure smooth payment operations, They print new currency for the Federal Reserve, They regulate interest rates for loans, They supervise the construction of new banks

Back

They process billions of checks written every year to ensure smooth payment operations

Front

What is a significant change in check processing that occurred in 2003?

Back

Only electronic images of checks are returned to the issuer, not the physical checks

Front

Which of the following is a key function of the Federal Reserve related to consumer protection?
Options:
Issuing driver's licenses,
Supplying information on financial topics such as credit reports and mortgages,
Regulating food safety standards,
Managing public transportation systems

Back

Supplying information on financial topics such as credit reports and mortgages

Front

When you buy a car or furniture, what must the seller disclose according to the Federal Reserve's requirements?

Back

The size of the down payment, number and size of monthly payments, and total interest over the life of the loan

Front

How does the Federal Reserve act as the government's bank?

Back

By conducting auctions of Treasury securities and maintaining deposit accounts for the Treasury

Front

In the context of fractional reserves, what are legal reserves?

Back

Coins and currency that banks hold in their vaults plus deposits at the Fed

Front

Why does a fractional reserve system allow the money supply to grow?

Back

Because banks can lend out the portion of deposits not held as legal reserves