chap4

What are three weaknesses of the national banking system that existed before the Federal Reserve System?

• Inefficient payments system

• Flexible money supply to demand changes

• Efficient lending/borrowing mechanism

• Liquidity problems

Who must join the Federal Reserve System as member banks?

• Both state-chartered and national banks

• Only national banks

• Only credit unions

• Only state-chartered banks

What is the composition of the Fed Board of Governors?

• Five members

• Nine members

• Twelve members

• Fifteen members

How does the Fed use reserve requirements to carry out monetary policy?

• Increasing reserve requirements to decrease money supply

• Decreasing reserve requirements to increase money supply

• Not related to monetary policy

• Keeping reserve requirements constant

What is the discount rate policy employed by the Fed?

• Setting high interest rates for borrowing

• Setting fixed interest rates for borrowing

• Setting low interest rates for borrowing

• Not having a discount rate policy

How does the Fed alter bank reserves using open-market operations?

• By setting fixed reserve amounts

• By directly injecting cash into banks

• By buying and selling government securities

• By controlling interest rates

What is the primary function of the Federal Open Market Committee?

• Supervising member banks

• Regulating consumer credit

• Setting reserve requirements

• Directing open market operations

What is the role of the Federal Advisory Council?

• Supervising credit unions

• Regulating non-commercial banks

• Providing advice on banking-related issues

• Setting monetary policy

Who appoints the Class C directors of the Federal Reserve District Banks?

• The Federal Open Market Committee

• The member banks of the district

• The Fed Board of Governors

• The President of the United States

What is the purpose of the Monetary Control Act of 1980?

• To reduce the power of the Fed

• To increase the importance of the Fed in the financial system

• To establish a new central bank

• To eliminate the Federal Reserve System