ECON 2035 Stahl Chapters
11,12,13,14,15 Questions and All
Correct Answers 2026 Updated.
The First Bank of the United States - Answer was disbanded in 1811 when its charter was not
renewed.
The Second Bank of the United States - Answer had its charter renewal vetoed in 1832.
The public's fear of centralized power and distrust of moneyed interests led to the demise of the
first two experiments in central banking, otherwise known as - Answer the First Bank of the
United States and the Second Bank of the United States.
The financial panic of 1907 resulted in such widespread bank failures and substantial losses to
depositors that the American public finally became convinced that - Answer a central bank
was needed to prevent future panics
What makes the Federal Reserve so unique compared to other central banks around the world
is its - Answer decentralized structure
Which of the following is NOT an entity of the Federal Reserve System? - Answer The
Comptroller of the Currency
Which of the following is an entity of the Federal Reserve System? - Answer The FOMC
The three largest Federal Reserve banks (New York, Chicago, and San Francisco) combined hold
more than ________ percent of the assets of the Federal Reserve System. - Answer 50
The Federal Reserve Banks are ________ institutions since they are owned by the ________. -
Answer quasi-public; private commercial banks in the district where the Reserve Bank is
located
Each Federal Reserve bank has nine directors. Of these ________ are appointed by the member
banks and ________ are appointed by the Board of Governors. - Answer six; three
The nine directors of the Federal Reserve Banks are split into three categories: ________ are
professional bankers, ________ are leaders from industry, and ________ are to represent the
public interest and are not allowed to be officers, employees, or stockholders of banks. - Answer
3; 3; 3
,Member commercial banks have purchased stock in their district Fed banks; the dividend paid
by that stock is limited by law to ________ percent annually. - Answer six
The Federal Reserve Bank of ________ plays a special role in the Federal Reserve System
because it houses the open market desk. - Answer New York
The president from which Federal Reserve Bank always has a vote in the Federal Open Market
Committee? - Answer New York
An important function of the regional Federal Reserve Banks is - Answer clearing checks
Which of the following functions is not performed by any of the twelve regional Federal Reserve
Banks? - Answer Setting interest rates payable on time deposits
All ________ are required to be members of the Fed. - Answer nationally chartered banks
Of all commercial banks, about ________ percent belong to the Federal Reserve System. -
Answer 38
Prior to 1980, member banks left the Federal Reserve System due to - Answer the high cost
of required reserves.
The Fed's support of the Depository Institutions Deregulation and Monetary Control Act of 1980
stemmed in part from its - Answer concern over declining Fed membership
Banks subject to reserve requirements set by the Federal Reserve System include - Answer
all banks whether or not they are members of the Federal Reserve System
The Depository Institutions Deregulation and Monetary Control Act of 1980 - Answer
established uniform reserve requirements for all banks
There are ________ members of the Board of Governors of the Federal Reserve System -
Answer 7
Members of the Board of Governors are - Answer appointed by the president of the United
States and confirmed by the Senate.
,Each governor on the Board of Governors can serve - Answer one full nonrenewable
fourteen-year term plus part of another term
The Chairman of the Board of Governors is chosen from among the seven governors and serves
a ________ term. - Answer four-year
While the discount rate is "established" by the regional Federal Reserve Banks, in truth, the rate
is determined by - Answer the Board of Governors.
Which of the followings is a duty of the Board of Governors of the Federal Reserve System -
Answer Setting margin requirements, the fraction of the purchase price of the securities that
has to be paid for with cash.
Which of the followings is not a current duty of the Board of Governors of the Federal Reserve
System? - Answer Setting the maximum interest rates payable on certain types of time
deposits under Regulation Q.
The Federal Open Market Committee usually meets ________ times a year.
A) four - Answer eight
The Federal Reserve entity that makes decisions regarding the conduct of open market
operations is the - Answer Federal Open Market Committee.
The Federal Open Market Committee consists of the - Answer seven members of the Board
of Governors and five presidents of the regional Fed banks.
The majority of members of the Federal Open Market Committee are - Answer the seven
Federal Reserve governors
Each Fed bank president attends FOMC meetings; although only ________ Fed bank presidents
vote on policy, all ________ provide input. - Answer five; twelve
Although neither ________ nor the ________ are officially set by the Federal Open Market
Committee, decisions concerning these policy tools are effectively made by the committee. -
Answer reserve requirements; discount rate
The research document given to the Federal Open Market Committee that contains information
on the state of the economy in each Federal Reserve district is called the - Answer beige
book.
, The teal book is the Fed research document containing - Answer A) the forecast of national
economic variables for the next three years.
B) forecasts of the money aggregates conditional on different monetary policy stances.
both A and B
The Federal Open Market Committee's "balance of risks" is an assessment of whether, in the
future, its primary concern will be - Answer higher inflation or a weaker economy.
Subject to the approval of the Board of Governors, the decision of choosing the president of a
district Federal Reserve Bank is made by - Answer district bank directors who are not
professional bankers.
Instrument independence is the ability of ________ to set monetary policy ________. - Answer
the central bank; instruments
The ability of a central bank to set monetary policy instruments is - Answer instrument
independence
Goal independence is the ability of ________ to set monetary policy ________. - Answer the
central bank; goals
The ability of a central bank to set monetary policy goals is - Answer goal independence.
Members of Congress are able to influence monetary policy, albeit indirectly, through their
ability to - Answer propose legislation that would force the Fed to submit budget requests to
Congress, as must other government agencies
The case for Federal Reserve independence does not include the idea that - Answer policy is
always performed better by an elite group such as the Fed.
The political business cycle refers to the phenomenon that just before elections, politicians
enact ________ policies. After the elections, the bad effects of these policies (for example,
________ ) have to be counteracted with ________ policies. - Answer expansionary; a higher
inflation rate; contractionary
The strongest argument for an independent Federal Reserve rests on the view that subjecting
the Fed to more political pressures would impart - Answer an inflationary bias to monetary
policy.
11,12,13,14,15 Questions and All
Correct Answers 2026 Updated.
The First Bank of the United States - Answer was disbanded in 1811 when its charter was not
renewed.
The Second Bank of the United States - Answer had its charter renewal vetoed in 1832.
The public's fear of centralized power and distrust of moneyed interests led to the demise of the
first two experiments in central banking, otherwise known as - Answer the First Bank of the
United States and the Second Bank of the United States.
The financial panic of 1907 resulted in such widespread bank failures and substantial losses to
depositors that the American public finally became convinced that - Answer a central bank
was needed to prevent future panics
What makes the Federal Reserve so unique compared to other central banks around the world
is its - Answer decentralized structure
Which of the following is NOT an entity of the Federal Reserve System? - Answer The
Comptroller of the Currency
Which of the following is an entity of the Federal Reserve System? - Answer The FOMC
The three largest Federal Reserve banks (New York, Chicago, and San Francisco) combined hold
more than ________ percent of the assets of the Federal Reserve System. - Answer 50
The Federal Reserve Banks are ________ institutions since they are owned by the ________. -
Answer quasi-public; private commercial banks in the district where the Reserve Bank is
located
Each Federal Reserve bank has nine directors. Of these ________ are appointed by the member
banks and ________ are appointed by the Board of Governors. - Answer six; three
The nine directors of the Federal Reserve Banks are split into three categories: ________ are
professional bankers, ________ are leaders from industry, and ________ are to represent the
public interest and are not allowed to be officers, employees, or stockholders of banks. - Answer
3; 3; 3
,Member commercial banks have purchased stock in their district Fed banks; the dividend paid
by that stock is limited by law to ________ percent annually. - Answer six
The Federal Reserve Bank of ________ plays a special role in the Federal Reserve System
because it houses the open market desk. - Answer New York
The president from which Federal Reserve Bank always has a vote in the Federal Open Market
Committee? - Answer New York
An important function of the regional Federal Reserve Banks is - Answer clearing checks
Which of the following functions is not performed by any of the twelve regional Federal Reserve
Banks? - Answer Setting interest rates payable on time deposits
All ________ are required to be members of the Fed. - Answer nationally chartered banks
Of all commercial banks, about ________ percent belong to the Federal Reserve System. -
Answer 38
Prior to 1980, member banks left the Federal Reserve System due to - Answer the high cost
of required reserves.
The Fed's support of the Depository Institutions Deregulation and Monetary Control Act of 1980
stemmed in part from its - Answer concern over declining Fed membership
Banks subject to reserve requirements set by the Federal Reserve System include - Answer
all banks whether or not they are members of the Federal Reserve System
The Depository Institutions Deregulation and Monetary Control Act of 1980 - Answer
established uniform reserve requirements for all banks
There are ________ members of the Board of Governors of the Federal Reserve System -
Answer 7
Members of the Board of Governors are - Answer appointed by the president of the United
States and confirmed by the Senate.
,Each governor on the Board of Governors can serve - Answer one full nonrenewable
fourteen-year term plus part of another term
The Chairman of the Board of Governors is chosen from among the seven governors and serves
a ________ term. - Answer four-year
While the discount rate is "established" by the regional Federal Reserve Banks, in truth, the rate
is determined by - Answer the Board of Governors.
Which of the followings is a duty of the Board of Governors of the Federal Reserve System -
Answer Setting margin requirements, the fraction of the purchase price of the securities that
has to be paid for with cash.
Which of the followings is not a current duty of the Board of Governors of the Federal Reserve
System? - Answer Setting the maximum interest rates payable on certain types of time
deposits under Regulation Q.
The Federal Open Market Committee usually meets ________ times a year.
A) four - Answer eight
The Federal Reserve entity that makes decisions regarding the conduct of open market
operations is the - Answer Federal Open Market Committee.
The Federal Open Market Committee consists of the - Answer seven members of the Board
of Governors and five presidents of the regional Fed banks.
The majority of members of the Federal Open Market Committee are - Answer the seven
Federal Reserve governors
Each Fed bank president attends FOMC meetings; although only ________ Fed bank presidents
vote on policy, all ________ provide input. - Answer five; twelve
Although neither ________ nor the ________ are officially set by the Federal Open Market
Committee, decisions concerning these policy tools are effectively made by the committee. -
Answer reserve requirements; discount rate
The research document given to the Federal Open Market Committee that contains information
on the state of the economy in each Federal Reserve district is called the - Answer beige
book.
, The teal book is the Fed research document containing - Answer A) the forecast of national
economic variables for the next three years.
B) forecasts of the money aggregates conditional on different monetary policy stances.
both A and B
The Federal Open Market Committee's "balance of risks" is an assessment of whether, in the
future, its primary concern will be - Answer higher inflation or a weaker economy.
Subject to the approval of the Board of Governors, the decision of choosing the president of a
district Federal Reserve Bank is made by - Answer district bank directors who are not
professional bankers.
Instrument independence is the ability of ________ to set monetary policy ________. - Answer
the central bank; instruments
The ability of a central bank to set monetary policy instruments is - Answer instrument
independence
Goal independence is the ability of ________ to set monetary policy ________. - Answer the
central bank; goals
The ability of a central bank to set monetary policy goals is - Answer goal independence.
Members of Congress are able to influence monetary policy, albeit indirectly, through their
ability to - Answer propose legislation that would force the Fed to submit budget requests to
Congress, as must other government agencies
The case for Federal Reserve independence does not include the idea that - Answer policy is
always performed better by an elite group such as the Fed.
The political business cycle refers to the phenomenon that just before elections, politicians
enact ________ policies. After the elections, the bad effects of these policies (for example,
________ ) have to be counteracted with ________ policies. - Answer expansionary; a higher
inflation rate; contractionary
The strongest argument for an independent Federal Reserve rests on the view that subjecting
the Fed to more political pressures would impart - Answer an inflationary bias to monetary
policy.
