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Federal Reserve Test

Total questions: 101

Worksheet time: 3hrs 32mins

Name
Class
Date
1.

What is the Federal Reserve?

a)

The Central Bank of the US

b)

The extra money the government has for a rainy day

c)

The government agency that investigates crime

d)

The government's bank account

2.

Where is the Board of Governors located?

a)
New York City
b)
Los Angeles
c)
Chicago
d)
Washington, D.C.
3.

How many district banks are there?

a)

50

b)

25

c)

12

d)

1

4.

Match the Functions of the Federal Reserve with its Description

a)

Monetary Policy

1.

Using tools to control the amount of money and credit in the economy

b)

Payment Services

2.

Overseeing checks and electronic payment

c)

Supervision and Regulation

3.

Overseeing Banks

d)

Financial System Stability

4.

Overseeing the financial system

e)

Consumer Protection and Community Development

5.

Overseeing consumer laws

5.

The Federal Reserve System is also know as The Fed.

a)

True

b)

False

6.

The Federal Reserve is the

a)

central bank for the United States

b)

central bank for the United Kingdom

c)

central bank for South America

d)

central bank for the united states

7.

The Fed is responsible for the country's

a)

bank note

b)

bonds

c)

money

d)

monetary system

8.

The Fed is comprised of how many regional central banks

a)

5

b)

6

c)

10

d)

12

9.

Why was New York not desired to be the only place for The Fed?

a)

home of Wall Street

b)

home of the Yankees

c)

many high- powered financial institutions

10.
Question Image

Match the following

a)

Dense Population

1.

small district

b)

sparsely populated

2.

large district

c)

District Name

3.

District Number

11.

The greater the financial activity in an area the smaller the Federal Reserve Bank district.

a)

True

b)

False

12.

The Fed identifies each district by

a)

a number

b)

letters

c)

name of city FRB is located

d)

the capital

13.

Each Federal Reserve Bank governs itself and supervises the member banks in its region.

a)

True

b)

False

14.
Question Image

Match the following

a)

Board of Governors

1.

14 - year terms

b)

Chairperson

2.

4 year term

c)

Federal Open Market Committee

3.

12 members

d)

BOG

4.

7 members

e)

Vice Chairperson

5.

Four Year Term

15.

Fed reports to

a)

US president

b)

members of executive branch

c)

US Congress

16.

All members of the Board of Governors

a)

appointed by the US president

b)

confirmed by US Representatives

c)

appointed by Congress

d)

confirmed by the Senate

17.

The chair of the Board of Governors is usually referred to as the Fed chair.

a)

True

b)

False

18.

The longest serving Fed chair was

a)

Alan Greenspan

b)
c)
19.

All seven members of the BOG are also members of the Federal Open Market Committee

a)

b)

20.

meets eight times a year to make key decisions that set US monetary policy and allow the FRS to carry out its functions

a)

FOME

b)

FOMC

c)

FRD

d)

Federal Open Market Committee

21.

The chairperson of the BOG is also the chairperson of the FOMC.

a)

b)

22.

Federal Open Market Committee (FOMC)

a)

BOG

b)

NY Fed President

c)

4 district presidents

d)

12 members total

23.

Those working for the Federal Reserve are held to a very low ethical standard.

a)

b)

24.

The Fed districts were set up in the early 1900s.

a)

True

b)

False

25.

Match the following

a)

_____ is the price that borrowers pay to borrow money

1.

interest rate

b)

_____ is how much money each bank is required by the Fed to keep on hand

2.

reserve requirement

c)

_____ is the interest rate the banks charge their best customers

3.

prime rate

d)

_____ is the amount of money circulating in the economy

4.

money supply

26.

The Fed has how many primary functions?

a)

1

b)

2

c)

3

d)

4

27.
Question Image

Match the following

a)

FOMC sets discount rate

1.

every two weeks

b)

BOG

2.

approves new rate

c)

business can't borrow $

3.

let go of employees

d)

business borrow $

4.

grow their business

e)

Fed

5.

effects employment

28.

Bank regulations supervised by the Fed

a)

implement laws passed by Congress

b)

evaluate their soundness

c)

use software to screen for negative trends

d)

use software to spy on other banks

29.

Federal Reserve Banks offer these services

a)

collect & pay funds from 2 member banks

b)

transfer funds almost immediately

c)

deposit payroll check & auto pay bills

d)

holding reserves from member banks

e)

provide short-term loans to banks

30.
"The Fed" refers to the....
a)
Federal Bureau of Investigation
b)
Federal Government
c)
Federal Reserve System
d)
Federal Income Tax
31.
The Federal Reserve System was established in
a)
1799
b)
1913
c)
1863
d)
1881
32.
The Federal Reserve
a)
is made up of 12 district banks and 25 branch banks.
b)
is managed by a 12-member board of directors.
c)
is made up of district banks that operate independently from one another.
33.
Fee charged to borrow money
a)
Inflation
b)
Interest
c)
Discount rate
d)
Reserve requirement
34.
Which part of the Fed decides when to raise or lower interest rates?
a)
Board of Governors
b)
Advisory Committee
c)
Chairman
d)
Federal Open Market Committee
35.
Influencing the economy by changing the reserve requirement is called:
a)
Fiscal policy
b)
Monetary policy
c)
Tight Money
d)
Easy Money
36.
Does increasing the money supply cause inflation or deflation?
a)
Inflation
b)
Deflation
37.
The primary role of the Federal Reserve Bank is to steer the economy by
a)
controlling the budget
b)
setting spending levels.
c)
controlling the money supply.
d)
loaning out money.
38.
In a recession, the Fed would likely
a)
Increase the supply of money in the economy
b)
Decrease the supply of the money in the economy
39.
The Federal Reserve can increase __________, which makes banks more selective when loaning out money
a)
Reserve Requirements
b)
Percentage/Earnings Ratios
c)
Dividends
d)
Blue Chip Stocks
40.
If the economy is expanding too quickly, the Federal Reserve will institute which type of monetary policy?
a)
Expansionary
b)
Contractionary
c)
Equanimitous
d)
Whole Dollar
41.

The current chairperson of the Federal Reserve is:

a)

Robert E. Rubin

b)

Jerome Powell

c)

Ben Bernanke

d)

Janet Yellen

42.
Who is in charge of fiscal policy?
a)
Government
b)
Federal Reserve
43.
Which of the following are responsible for making fiscal policy decision? 
a)
The President and Congress
b)
The Federal Reserve System
c)
The National Council of Economic Advisors
d)
The commerce Department
44.
Taxing & spending to help the economy grow is referred to as
a)
expansionary policy
b)
monetary policy
c)
contractionary policy
d)
budget deficit
45.
The federal government's overall approach to spending and taxes is called
a)
Physical Policy
b)
Fiscal Policy
c)
Money
d)
Monetary Policy
46.
True or False-- the Federal Reserve helps with fiscal policy
a)
True
b)
False
47.

What is the primary strategy of monetary policy?

a)

Regulating the supply of money

b)

Increasing government spending

c)

Selling government bonds

d)

Taxing and spending decisions

48.

What does fiscal policy primarily involve?

a)

Setting the federal funds rate

b)

Taxing and spending decisions by public officials

c)

Regulating the supply of money

d)

Buying and selling government securities

49.

What is the reserve requirement?

a)

The percentage of deposits banks must hold in reserve

b)

The interest rate for loans between banks

c)

The rate at which banks lend to the Federal Reserve

d)

The total amount of money in circulation

50.

What is the federal funds rate?

a)

The rate at which the government borrows from the Federal Reserve

b)

The interest rate set by the Federal Reserve for loans to commercial banks

c)

The rate banks charge each other for overnight loans

d)

The percentage of deposits banks must hold in reserve

51.

What are open market operations?

a)

The process of setting the reserve requirement

b)

The Federal Reserve's practice of buying and selling government bonds

c)

The method of determining the federal funds rate

d)

The strategy for adjusting the discount rate

52.

What is the purpose of an easy money policy?

a)

To put more money into the economy

b)

To increase the reserve requirement

c)

To sell securities on the open market

d)

To counteract inflation

53.

What does the Federal Open Market Committee (FOMC) oversee?

a)

The buying and selling of government securities (bonds)

b)

Setting the reserve requirement

c)

Determining fiscal policy

d)

Regulating currency exchange rates

54.

What is the goal of contractionary fiscal policy?

a)

To counteract inflation

b)

To decrease taxes

c)

To increase government spending

d)

To deal with unemployment

55.

What is the discount rate?

a)

The interest rate for consumer loans

b)

The rate at which banks lend to each other

c)

The target interest rate for the economy

d)

The interest rate the Federal Reserve charges commercial banks

56.

What characterizes supply side fiscal policy?

a)

Increasing taxes to reduce inflation

b)

Decreasing government spending and taxes to increase aggregate supply

c)

Buying securities to put money into the economy

d)

Increasing the reserve requirement to control money supply

57.

Match the following as Classical, Fiscal, or Monetary

a)

Fiscal

1.

Budget Deficit & Politics

b)

Monetary

2.

Reserve requirement, discount rates, excess reserves

c)

Classical

3.

Self correction

58.

Match the following as Classical, Fiscal, or Monetary

a)

Fiscal

1.

Taxes & Government Spending

b)

Monetary

2.

Open Market Operations

c)

Classical

3.

Hands Off

59.

What is the purpose of Monetary Policy?

a)

contribute to economic growth and stability

b)

Functions like Fiscal Policy

c)

keep rich people from getting too rich

d)

give Congress and the political parties more control of the economy

60.

A problem with Monetary Policy is that even if banks have ​ (a)   , they might not turn that cash into ​ (b)   , which means the Money​ (c)   might not increase as planned. 

Choose from the below words
Excess Reserves
loans
Supply
Required Reserves
Demand
61.

Which of the following is NOT a tool of monetary policy?

a)

Interest on required and excess reserves

b)

Open Market Operations

c)

Government Spending

d)

Discount Rate

62.

The Federal Reserve System is...

a)

The world central bank

b)

the U.S. central bank

c)

a place stocks and bonds are sold

d)

All of the above

63.

The Federal Reserve was first created because our nation

a)

didn't trust banks

b)

wanted complete control over all banks

c)

experienced several banking panics and crisis

d)

none of the above

64.

What services does the Fed provide to the banks?

a)

provides cash and lends money to banks

b)

processes payments and electronic money transfers

c)

check clearing

d)

all of the above

65.

Who decides when and which of three monetary tools should be in an effort to manage the economy?

a)

The President

b)

Congress

c)

The Fed Chief

d)

The Federal Open Market Committee

66.

When the Federal Reserve wants to encourage the economy to grow, what does it do with money supply?

a)

increase the money supply

b)

decrease the money supply

c)

sell all of its asset

d)

none of the above

67.

Match the following

a)

_____ is the price that borrowers pay to borrow money

1.

interest rate

b)

_____ is how much money each bank is required by the Fed to keep on hand

2.

reserve requirement

c)

_____ is the interest rate the banks charge their best customers

3.

prime rate

d)

_____ is the amount of money circulating in the economy

4.

money supply

68.

True or False: Individuals and small businesses are allowed to have bank accounts or do banking with the Fed.

a)

True

b)

False

69.

True or False: The Fed is able to influence the economy by increasing or decreasing the money supply using three key monetary tools.

a)

True

b)

False

70.
There are _______ Regional Federal Reserve Banks, and one Federal Reserve Board of Governors.
a)
50
b)
4
c)
12
d)
52
71.
To much money in our economy leads to 
a)
Inflation
b)
Recession
72.

The Fed provides financial services to who?

a)

Citizens

b)

Banks

c)

Federal Government

d)

Reserve banks

73.
What does Inflation do to the value of money?
a)
Makes it go up.
b)
Makes it go down.
c)
Makes it stay the same.
74.
In a recession, the Fed would likely
a)
Increase the supply of money in the economy
b)
Decrease the supply of the money in the economy
75.
The Federal Reserve can increase __________, which makes banks more selective when loaning out money
a)
Reserve Requirements
b)
Percentage/Earnings Ratios
c)
Dividends
d)
Blue Chip Stocks
76.
If the economy is expanding too quickly, the Federal Reserve will institute which type of monetary policy?
a)
Expansionary
b)
Contractionary
c)
Equanimitous
d)
Whole Dollar
77.

The tools and strategies used by the Fed to stabilize the economy are called...

a)

Fiscal policy

b)

Monetary policy

c)

Tight Money

d)

Easy Money

78.

What is the FOMC?

a)

A Federal Reserve agency that controls all banks and prevents consumer choice.

b)

A Federal Reserve agency that specializes in monetary policy making.

c)

A Federal Reserve agency specializing in ensuring the nation's economic stability.

d)

Making legislation, declaring war, and interacting in foreign trade.

79.

How many members of the FOMC are from the Board of Governors?

a)

10

b)

7

c)

0

d)

5

80.

Which of the following is NOT a job of the Fed?

a)

monitoring member bank reserves

b)

clearing checks

c)

issuing paper currency

d)

printing and minting currency

81.

What is the discount rate?

a)

The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window.

b)

The interest rate on a credit card

c)

The rate at which a company's stock is sold

d)

The price reduction offered to customers at a retail store

82.

What are reserve requirements?

a)

The amount of funds that a bank must hold in reserve against specified deposit liabilities.

b)

The process of setting aside funds for future investments

c)

The maximum amount of money a bank can lend to customers

d)

The interest rate charged by the central bank to commercial banks

83.

What is the Federal Reserve System?

a)

A professional sports league in the United States

b)

The central banking system of the United States

c)

A popular TV show in the United States

d)

A fast food chain in the United States

84.

What is expansionary monetary policy?

a)

Expansionary monetary policy is only used during economic downturns

b)

Expansionary monetary policy has no impact on the money supply or interest rates

c)

Expansionary monetary policy aims to decrease the money supply and increase interest rates

d)

Expansionary monetary policy is a type of macroeconomic policy that aims to increase the money supply and decrease interest rates in order to stimulate economic growth and boost aggregate demand.

85.

What is contractionary monetary policy?

a)

A policy that aims to encourage borrowing and spending by reducing interest rates

b)

A type of monetary policy that aims to increase the money supply in the economy

c)

A policy that aims to stabilize prices by increasing the money supply

d)

A type of monetary policy that aims to reduce the money supply in the economy

86.

What is the purpose of the discount rate in monetary policy?

a)

To regulate international trade

b)

To stabilize the stock market

c)

To encourage saving and investment

d)

To control the money supply and influence economic activity

87.

How do reserve requirements affect the economy?

a)

Reserve requirements have no impact on the economy

b)

Reserve requirements affect the economy by influencing the amount of money banks can lend and the overall money supply in the economy.

c)

Reserve requirements only affect individual bank profits

d)

Reserve requirements lead to an increase in overall money supply

88.

What are the tools used by the Federal Reserve System to implement monetary policy?

a)

Tax policy, interest rates, and government spending

b)

Inflation targeting, exchange rates, and fiscal policy

c)

Stock market, unemployment rate, and GDP growth

d)

Open market operations, discount rate, and reserve requirements

89.

What are the effects of expansionary monetary policy on the economy?

a)

Leads to higher unemployment and reduces economic growth

b)

Causes deflation and decreases investment

c)

Has no impact on the economy

d)

Stimulates economic growth, increases investment, and reduces unemployment.

90.

What are the effects of contractionary monetary policy on the economy?

a)

It reduces inflation and slows down economic growth.

b)

It has no impact on inflation or economic growth.

c)

It increases inflation and speeds up economic growth.

d)

It reduces unemployment and increases consumer spending.

91.

Expansionary monetary policy causes inflation by?

a)
Increasing the money supply and stimulating demand
b)
Decreasing the money supply and reducing demand
c)
Causing deflation instead of inflation
d)
Having no impact on inflation
92.

How does expansionary monetary policy stimulate demand?

a)
Raising interest rates and discouraging spending and investment
b)
Keeping interest rates unchanged and reducing government spending
c)
Increasing taxes and reducing the money supply
d)
Lowering interest rates and encouraging spending and investment
93.

What are the three functions of money

a)

store of value

b)

unit of account

c)

medium of exchange

d)

measure of wealth

94.

Match the following

a)

Fiat Money

1.

Money that has no intrinsic value

b)

Commodity Money

2.

Money that is backed by a physical commodity

c)

Representative Money

3.

Money that represents a claim on a commodity

95.

Reorder the following into how expansionary policy stimulates the economy

a)

increase the money supply

b)

increase aggregate demand

c)

increase output and employment

1)
2)
3)
96.

What is the Federal Reserves Dual Mandate?

a)
Promote minimum employment and fluctuating prices
b)
Promote maximum employment and stable prices
c)
Minimize employment and stable prices
d)
Maximize unemployment and stable prices
97.

How does money function as a unit of account?

a)
It is only used for making purchases
b)
It is used to store value in a physical form
c)
It provides a common measure for comparing the value of goods and services.
d)
It has no impact on the economy
98.

How does money function as a medium of exchange?

a)
It is widely accepted as a form of payment for goods and services.
b)
It can only be used for online purchases and not in physical stores
c)
It is only accepted in certain countries and not others
d)
It grows on trees and can be used for bartering
99.

Who is the current chair of the Federal Reserve?

a)
Janet Yellen
b)
Jerome Powell
c)
Ben Bernanke
d)
Alan Greenspan
100.

Why is it helpful that money acts as a store of value?

a)
It causes inflation
b)
It decreases the value of goods and services
c)
It leads to economic instability
d)
It helps to maintain purchasing power over time.
101.

Organize these into the type of money

Categorize the following

US Dollar

Euro

Pound Sterling

Japanese Yen

Swiss Franc

Canadian Dollar

Gold

Silver

Oil

Wheat

Corn

Rice

Gold Standard

Silver Certificate

Bank of England note

Reserve Bank Note

Convertible Virtual Currency

Backed Currency

Fiat Money
Commodity Money
Representative Money

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