Federal Reserve Quiz 1 (20 MCQs)

Quiz Instructions

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1. Which of the following is NOT a function of the Federal Reserve?

Correct Answer: D) Taxation and revenue collection.

2. The central bank of the United States is the:

Correct Answer: A) Federal Reserve Banking System.

3. The Monetary Control Act of 1980 required the Fed to .....

Correct Answer: B) Charge for its financial services.

4. The Truth in Lending Act requires banks to .....

Correct Answer: B) Disclose financial charges in advance.

5. Federal Reserve head offices each have a ..... member board of directors.

Correct Answer: B) 9.

6. Elementary schools, police departments, and electrical service are typically paid for by

Correct Answer: D) Local governments.

7. Why do people accept money as payment for goods and services?

Correct Answer: C) People trust the U.S. government.

8. If a central bank significantly increases its sales of government bonds, it is most likely responding to which of the following?

Correct Answer: D) High inflation rates or Hyperinflation.

9. The parts of the federal government that regulate businesses and the free market, all mostly include what in their name?

Correct Answer: C) Commission or board.

10. The Required Reserve Ratio, Federal Funds Rate, and Discount Rate are all tools of .....

Correct Answer: C) The Federal Reserve.

11. The 2004 Check Clearing for the 21st Century Act, was also known as Check 21, permits banks to

Correct Answer: C) Replace original checks with "substitute checks" or electronic replicas.

12. How many reserve banks are there?

Correct Answer: B) 12.

13. Who supervises banks to make sure that they are not doing anything illegal?

Correct Answer: C) Federal Reserve.

14. Leyla bought a bagel with coins issued by the government. This type of money is

Correct Answer: A) Fiat.

15. Jill bought a laptop with a silver receipt (paper that can be traded for silver). This type of money is

Correct Answer: C) Representative money.

16. The federal government might use fiscal policy to slow down an economic expansion by ..... federal spending & ..... federal taxes.

Correct Answer: A) Decreasing / Increasing.

17. Which of the following is the single largest federal expenditure?

Correct Answer: C) Social Security.

18. What is clearinghouse?

Correct Answer: A) Help clear the billions of checks being processed.

19. When was the Federal Reserve Act signed into law?

Correct Answer: A) December 23, 1913.

20. What is the annual percentage rate (APR)

Correct Answer: A) Annual rate (including fees) paid for borrowed money.