Chapter 16 Monetary Policy Quiz

Who owns the Federal Reserve System, or Fed?

• Congress

• U.S. citizens

• the Board of Governors

• member banks

The Fed is considered a publicly controlled system because the ________________________________. Select ALL that apply.

• A. president appoints members to its board

• B. Senate approves appointments to its board

• C. House of Representatives advises its board

• D. board is expected to govern in the public interest

Which entity is the Fed’s primary monetary policy-making body with the power to raise or lower interest rates?

• Board of Governors

• Federal Advisory Council

• Federal Open Market Committee

• Consumer Financial Protection Bureau

When the Fed regulates the electronic transfer of funds between businesses and financial institutions, it is performing its responsibility to (a)   .

• regulate banks

• maintain the payments system

• maintain the currency

• protect consumers

Who is responsible for examining any bank the Fed does not directly inspect and regulate?

• United States Mint

• Federal Reserve District Banks

• U.S. Bureau of Engraving and Printing

• Federal Deposit Insurance Corporation

Banks are required to set aside a portion of their total deposits under a system called (a)   .

• legal reserve

• excess reserve

• fractional reserve

• member bank reserve

Long-term interest rates differ from short-term interest rates in that they are determined by (a)   .

• supply and demand

• the Federal Open Market Committee

• Congress

• the Council of Economic Advisors

What monetary policy tool is the Fed using when it buys government securities to expand the money supply?

• easy money

• discount rate

• reserve requirement

• open market operations

The interest rate the Fed charges on loans to financial institutions is called the (a)   .

• prime rate

• reserve rate

• discount rate

• federal funds rate

A rule-based approach that promotes steady monetary growth at levels low enough to control inflation is called (a)   .

• monetarism

• supply-side policy

• wage-price control

• quantity theory of money