Federal Reserve Quiz 17 (18 MCQs)

Quiz Instructions

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1. ..... accept deposits from depositors and lend money to businesses and consumers.

Correct Answer: A) Financial institutions.

2. Which financial mogul intervened to help stabilize the economy during the financial panics in the early 1900's?

Correct Answer: B) J.P. Morgan.

3. The #1 source of money that banks have at their disposal to loan out:

Correct Answer: C) The Savings of Depositers.

4. We are in a recession. Factory orders are down, and the economy appears to be slumping. What should the Fed do?

Correct Answer: B) Easy Money.

5. How many Federal Reserve Banks are there?

Correct Answer: C) 12.

6. As the bank for banks, which of these is NOT a service provided by the Federal Reserve?

Correct Answer: C) Foreign currency exchange.

7. Percentage of deposits that the Fed requires banks to hold back and not lend outThis is the money kept in the vault.

Correct Answer: B) Reserve Requirement Rate.

8. Who provides "advise and consent" on nominations to the Federal Reserve board of Governors?

Correct Answer: B) Just the Senate.

9. Assume a bank has total deposits of $ 100, 000 and $ 10, 000 is set aside to meet reserve requirements of the Fed. Its required reserve ratio is:

Correct Answer: B) 10%.

10. The buying and selling of government securities by the Federal Reserve to alter the money supply is called .....

Correct Answer: B) Open market operations.

11. What can the Federal Reserve do to help the economy grow?

Correct Answer: D) Lower the discount rate.

12. The interest rate that the Federal Reserve charges for loans to commercial banks is called the .....

Correct Answer: A) Discount Rate.

13. Which of the following is not a primary function of the Federal Reserve?

Correct Answer: D) Providing debt reduction ideas.

14. Banks would be expected to minimize holding excess reserves because this practice is:

Correct Answer: B) Not profitable.

15. Character:

Correct Answer: A) Will you pay back the loan?.

16. All of the following are roles And responsibilities of the FR system except

Correct Answer: D) Taking the money away from people.

17. If the Central Bank wants to increase the amount people spend it could .....

Correct Answer: D) Lower interest rates.

18. The relationship between risk and return in investing can be stated as:

Correct Answer: B) Higher risk indicates higher potential returns.