Chapter 13 HW example #43048

30 January 2023
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The primary reason for the creation of the Federal Reserve System
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to reduce or eliminate future bank panics.
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The many regional Federal Reserve banks resulted from a compromise between parties‚Äč favoring:
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a private central bank and those favoring a government institution.
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Why is the Twelfth Federal Reserve district so geographically‚Äč large, while the Second Federal Reserve district is so small by‚Äč comparison?
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The districts represent the population and economic interests in 1913 then the Federal Reserve Act was created.
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Why is the New York Federal Reserve always a voting member on the‚Äč FOMC?
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. The New York Federal Reserve is actively involved in the bond and foreign exchange markets. B. The New York Federal Reserve district contains many of the largest commercial banks in the United States. C. It is the only Federal Reserve bank that is a member of the Bank for International Settlements‚Äč (BIS).
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Which of the following functions is not performed by any of the 12 regional Federal Reserve‚Äč banks?
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Setting interest rates payable on time deposits
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Although neither‚Äč _____ nor the‚Äč _____ is officially set by the Federal Open Market Committee LOADING... ‚Äč, decisions concerning these policy tools are effectively made by the committee.
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reserve‚Äč requirements; discount rate
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Monetary policy is determined by
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The Federal Open Committee
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The Federal Open Market Committee is comprised of
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the seven members of the Board of Governors plus five of the twelve Federal Reserve Bank presidents.
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The interest rate on overnight loans from one bank to another is the
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federal funds rate
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____ are the most important policy tool the Fed has for controlling the money supply.
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Open market operation
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The ability of the central bank to set the goals of monetary policy is known as
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goal independence
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The ability of the central bank to set reserve requirements is an example of
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Instrument independence
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Eliminating the‚Äč Fed's independence might lead to a more pronounced political business cycle because a politically exposed Fed would be more concerned with‚Äč:
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‚Äčshort-run objectives and thus be more likely to engage in expansionary policies designed to lower unemployment and interest rates before an election.
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A situation in which monetary policy is expansionary prior to an election and contractionary after an election is known as the
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Political Business Cycle
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An independent Federal Reserve
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Is less likely to produce higher inflation and less likely to produce a political business cycle.
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The Federal Reserve Banks are‚Äč ________ institutions since they are owned by the‚Äč ________.
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quasi‚ąí‚Äčpublic; private commercial banks in the district where the Reserve Bank is located
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Each Federal Reserve bank has nine directors. Of these‚Äč ________ are appointed by the member banks and‚Äč ________ are appointed by the Board of Governors.
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‚Äčsix; three
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The nine directors of the Federal Reserve Banks are split into three‚Äč categories: ________ are professional‚Äč bankers, ________ are leaders from‚Äč industry, and‚Äč ________ are to represent the public interest and are not allowed to be‚Äč officers, employees, or stockholders of banks.
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‚Äč3; 3; 3
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There are‚Äč ________ members of the Board of Governors of the Federal Reserve System.
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7
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Members of the Board of Governors are
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appointed by the president of the United States and confirmed by the Senate.
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Each governor on the Board of Governors can serve
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one full nonrenewable fourteen‚ąíyear term plus part of another term.
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The Chairman of the Board of Governors is chosen from among the seven governors and serves a‚Äč ________ renewable term.
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Four-yea
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The Chairman of the Board of Governors is chosen from among the seven governors and serves a‚Äč ________ renewable term.
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eight
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The Federal Reserve entity that makes decisions regarding the conduct of open market operations is the
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Federal Open Market Committee.
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Each Fed bank president attends FOMC‚Äč meetings; although only‚Äč ________ Fed bank presidents vote on‚Äč policy, all‚Äč ________ provide input
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five-twelve
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Subject to the approval of the Board of‚Äč Governors, the decision of choosing the president of a district Federal Reserve Bank is made by
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district bank directors who are not professional bankers.
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Goal independence is the ability of‚Äč ________ to set monetary policy‚Äč ________.
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the central‚Äč bank; goals
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Under the European System of Central‚Äč Banks, the National Central Banks have the same role as the‚Äč ________ of the Federal Reserve System.
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Federal Reserve Banks
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While legislation enacted in 1998 granted the Bank of Japan new powers and greater‚Äč autonomy, its critics contend that its independence is
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limited by the Ministry of‚Äč Finance's veto power over a portion of its budget.