tb14 - Chapter 14 Structure of Central Banks and the...

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Unformatted text preview: Chapter 14 Structure of Central Banks and the Federal Reserve System T Multiple Choice 1) Americans’ fear of centralized power and their distrust of moneyed interests explains why the U.S. did not have a central bank until the (a) 17th century. (b) 18th century. (c) 19th century. (d) 20th century. Answer: D Question Status: Previous Edition 2) The public’s 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 America. Answer: A Question Status: Previous Edition 3) Bank panics in the nineteenth and early twentieth centuries convinced many that (a) the Federal Reserve needed greater control over the banking system. (b) the Federal Reserve needed greater authority to deal with problem banks. (c) a central bank was needed to prevent future financial panics. (d) both (a) and (b) of the above. Answer: C Question Status: Revised 4) The primary reason for the creation of the Federal Reserve System was (a) the desire to reduce or eliminate bank panics. (b) the desire to stabilize short-term interest rates. (c) the desire to eliminate state-chartered banks. (d) the desire to create a means to finance World War I. (e) the desire to increase the demand for government bonds. Answer: A Question Status: Study Guide 468 Frederic S. Mishkin • Economics of Money, Banking, and Financial Markets, Seventh Edition 5) The primary reason for the creation of the Federal Reserve System was (a) the desire to have a lender of last resort. (b) the desire to stabilize short-term interest rates. (c) the desire to eliminate state-chartered banks. (d) the desire to create a means to finance World War I. (e) the desire to increase the demand for government bonds. Answer: A Question Status: New 6) When the charter of the Second Bank of the United States expired in 1836 (a) the incidence of banking panics declined. (b) the lack of a lender of last resort did not affect the banking system. (c) the lack of a lender of last resort led to increased banking panics. (d) the Treasury assumed the role of a lender of last resort. (e) both (a) and (d) of the above. Answer: C Question Status: New 7) 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....
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This note was uploaded on 10/17/2011 for the course ECON 317 taught by Professor Guidry during the Spring '11 term at Nicholls State.

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tb14 - Chapter 14 Structure of Central Banks and the...

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