Here are some practice questions:
1)The British central bank is known as
A)the Bank of London.
B)the British Federal Reserve.
C)the Bank of England.
D)the Bank of the Empire.
2)Which of the following factors contributed to the problems that banks began to face during the 1960s and 1970s?
A)very low interest rates
B)prolonged periods of recession
C)banking regulations enacted during the 1930s
D)very low inflation rates
3)Government regulation of banks in the United States
A)changes slowly over time as knowledge of the best way to organize the system increases.
B)has remained essentially unchanged since the early twentieth century.
C)changes abruptly in response to periodic financial crises.
D)generally increases during election campaigns as politicians exploit the public's hostility toward banks.
4)Congress created the Federal Reserve System
A)to process the receipt of taxes received by the Internal Revenue Service.
B)to provide a source of mortgage loans to the residential housing market.
C)to serve as a lender of last resort.
D)to regulate the value of the U.S. dollar against foreign currencies.
5)The creation of a lender of last resort in the United States
A)occurred in response to the S&L crisis of the 1980s.
B)was mandated in the U.S. Constitution.
C)has been recommended by the Treasury in its report of late 1992.
D)occurred in response to banking panics.
6)Which of the following did NOT occur as a result of the weakness of the Fed's actions during the banking crisis of the early 1930s?
A)A federal system of deposit insurance was introduced.
B)Congress amended the Fed's charter to limit the convertibility of dollars into gold.
C)Congress amended the Fed's charter to broaden the permissible collateral for discount loans.
D)Congress amended the Fed's charter to require it to make discount loans to any banks requesting them.
7)In late 1998, the Fed averted a possible financial panic by
A)using its influence to encourage banks to make loans to broker-dealers in the securities industry.
B)lowering interest rates.
C)using its influence to bring together the creditors of Long-Term Capital Management.
D)raising interest rates.
8)Congress has attempted to reduce competition among banks in order to
A)increase the tax revenues generated from bank profits.
B)lower interest rates charged on bank loans.
C)make the process of check clearing easier.
D)reduce the chance of moral hazard in banks? behavior.
9)Anticompetitive restrictions on banks generally result in
A)the persistence of traditional ways of doing things.
B)a stifling of innovation.
C)a passive attitude on the part of bank managers as they realize attempts to compete vigorously have been closed off.
D)an increase in innovation and competition.
10)The Japanese central bank is known as
A)the Federal Japanese Bank.
B)the Grand Nippon Central Bank.
C)the National Japanese Bank.
D)the Bank of Japan.
11)Which of the following is an asset of the Fed?
A)reserves of banks
B)checkable deposits in commercial banks
C)discount loans to banks
D)currency in circulation
12)Which of the following is a liability of the Fed?
A)reserves
B)U.S. government securities
C)checkable deposits in commercial banks
D)discount loans to banks
13)Banks prefer to hold their liquid balances as
A)mortgage loans. B) required reserves.
C)marketable securities. D) excess reserves.
14)The Fed's portfolio of securities consists principally of
A)U.S. Treasury obligations.
B)corporate bonds.
C)municipal bonds.
D)obligations of foreign governments.
15)What is the most direct method the Fed uses to change the monetary base?
A)changing the level of discount loans
B)changing the federal funds rate
C)open market operations
D)changing the required reserve ratio
16)When banks borrow on the federal funds market,
A)they pay a rate set by the Federal Reserve, rather than one set by market forces.
B)they typically pay a lower interest rate than the discount rate.
C)they borrow funds interest free.
D)they typically pay a higher interest rate than the discount rate.
17)If banks do not hold excess reserves, the multiple deposit expansion process ends when
A)total new reserves equal total checkable deposits created.
B)total reserves equal excess reserves.
C)total loans created equal total checkable deposits created.
D)all excess reserves have been eliminated.
1)The British central bank is known as
A)the Bank of London.
B)the British Federal Reserve.
C)the Bank of England.
D)the Bank of the Empire.
2)Which of the following factors contributed to the problems that banks began to face during the 1960s and 1970s?
A)very low interest rates
B)prolonged periods of recession
C)banking regulations enacted during the 1930s
D)very low inflation rates
3)Government regulation of banks in the United States
A)changes slowly over time as knowledge of the best way to organize the system increases.
B)has remained essentially unchanged since the early twentieth century.
C)changes abruptly in response to periodic financial crises.
D)generally increases during election campaigns as politicians exploit the public's hostility toward banks.
4)Congress created the Federal Reserve System
A)to process the receipt of taxes received by the Internal Revenue Service.
B)to provide a source of mortgage loans to the residential housing market.
C)to serve as a lender of last resort.
D)to regulate the value of the U.S. dollar against foreign currencies.
5)The creation of a lender of last resort in the United States
A)occurred in response to the S&L crisis of the 1980s.
B)was mandated in the U.S. Constitution.
C)has been recommended by the Treasury in its report of late 1992.
D)occurred in response to banking panics.
6)Which of the following did NOT occur as a result of the weakness of the Fed's actions during the banking crisis of the early 1930s?
A)A federal system of deposit insurance was introduced.
B)Congress amended the Fed's charter to limit the convertibility of dollars into gold.
C)Congress amended the Fed's charter to broaden the permissible collateral for discount loans.
D)Congress amended the Fed's charter to require it to make discount loans to any banks requesting them.
7)In late 1998, the Fed averted a possible financial panic by
A)using its influence to encourage banks to make loans to broker-dealers in the securities industry.
B)lowering interest rates.
C)using its influence to bring together the creditors of Long-Term Capital Management.
D)raising interest rates.
8)Congress has attempted to reduce competition among banks in order to
A)increase the tax revenues generated from bank profits.
B)lower interest rates charged on bank loans.
C)make the process of check clearing easier.
D)reduce the chance of moral hazard in banks? behavior.
9)Anticompetitive restrictions on banks generally result in
A)the persistence of traditional ways of doing things.
B)a stifling of innovation.
C)a passive attitude on the part of bank managers as they realize attempts to compete vigorously have been closed off.
D)an increase in innovation and competition.
10)The Japanese central bank is known as
A)the Federal Japanese Bank.
B)the Grand Nippon Central Bank.
C)the National Japanese Bank.
D)the Bank of Japan.
11)Which of the following is an asset of the Fed?
A)reserves of banks
B)checkable deposits in commercial banks
C)discount loans to banks
D)currency in circulation
12)Which of the following is a liability of the Fed?
A)reserves
B)U.S. government securities
C)checkable deposits in commercial banks
D)discount loans to banks
13)Banks prefer to hold their liquid balances as
A)mortgage loans. B) required reserves.
C)marketable securities. D) excess reserves.
14)The Fed's portfolio of securities consists principally of
A)U.S. Treasury obligations.
B)corporate bonds.
C)municipal bonds.
D)obligations of foreign governments.
15)What is the most direct method the Fed uses to change the monetary base?
A)changing the level of discount loans
B)changing the federal funds rate
C)open market operations
D)changing the required reserve ratio
16)When banks borrow on the federal funds market,
A)they pay a rate set by the Federal Reserve, rather than one set by market forces.
B)they typically pay a lower interest rate than the discount rate.
C)they borrow funds interest free.
D)they typically pay a higher interest rate than the discount rate.
17)If banks do not hold excess reserves, the multiple deposit expansion process ends when
A)total new reserves equal total checkable deposits created.
B)total reserves equal excess reserves.
C)total loans created equal total checkable deposits created.
D)all excess reserves have been eliminated.
posted by Chris at 3:24 PM
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