Chapter 14

Chapter 14 - Chapter 14 Exercise: . Key terms 1. Board Of...

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Unformatted text preview: Chapter 14 Exercise: . Key terms 1. Board Of Governors Of The Federal Reserve System 2. Federal Open Market Committee 3. Federal Reserve Banks 4. Goal Independence 5. Instrument Independence 6. Political Business Cycle .Multiple Choice 1. The publics hostility to the existence of a central bank led to the demise of the first two experiments in central banking: a. the First Bank of the United States and the Second Bank of the United States. b. the First Bank of the United States and the Central Bank of the United States. c. the First Central Bank of the United States and the Second Central Bank of the United States. d. the First Bank of North America United States and the Second Bank of North 2. The primary reason for the creation of the Federal Reserve System was the desire to reduce or eliminate bank panics. a. the desire to stabilize short-term interest rates. b. the desire to eliminate state-chartered banks. c. the desire to create a means to finance World War I. d. the desire to increase the demand for government bonds. 3. The financial panic of 1907 resulted in such widespread bank failures and substantial losses to depositors that the American public finally became convinced that a. the First Bank of the United States had failed to serve as a lender of last resort. b. the Second Bank of the United States had failed to serve as a lender of last resort. c. the Federal Reserve System had failed to serve as a lender of last resort. d. a central bank was needed to prevent future panics. 4. The unusual structure of the Federal Reserve System is perhaps best explained by a. Americans fear of centralized power. b. the traditional American distrust of moneyed interests. c. Americans desire to remove control of the money supply from the U.S. Treasury. d. all of the above. e. only (a) and (b) of the above. 5. Which of the following is not an entity of the Federal Reserve System? a. Federal Reserve Banks b. The FDIC c. The Board of Governors d. The Board of Advisors 6. Which of the following is an element of the Federal Reserve System? a. The Federal Reserve Banks b. The Board of Governors c. The FDIC d. Each of the above e. Only (a) and (b) of the above 7. Member commercial banks have purchased stock in their district Fed banks; the dividend paid by that stock is limited to a. four percent annually. b. five percent annually. c. six percent annually. d. eight percent annually. 8. Advocates of Fed independence fear that subjecting the Fed to direct presidential or congressional control would a. impart an inflationary bias to monetary policy....
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This note was uploaded on 01/10/2011 for the course FSD 201 taught by Professor Huong during the Spring '10 term at Beacon FL.

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Chapter 14 - Chapter 14 Exercise: . Key terms 1. Board Of...

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