ECON 2035 Chapter 13 / LSU Rakiten Exam
Questions With Correct Answers
Why was the Federal Reserve System split into 12 districts? - ANSWER The
Federal Reserve System was split into 12 districts because there was opposition
in Congress to establishing a single, unified central bank.
What are the changes to the Fed under the Dodd-Frank Act?
A. Making the Fed a member of the new Financial Stability Oversight Council
B. Designating a Fed vice chairman for regulatory supervision.
C. Ordering the government Accountability Office to audit the emergency
lending programs the fed carried out during the financial crisis.
D. All of the Above - ANSWER D. All of the Above
Why did Congress set up a system that had this tension between the Reserve
Banks and the Federal Reserve Board? - ANSWER 1. Tension was created to
ensure that various interests would have input into the conduct of monetary
policy.
2. This was all part of the organizational plan to prevent one faction of the
banking system from having too much power.
Has the tension been resolved in the modern Fed?
A. The tension has been resolved by the FOMC.
B. The tension has been resolved by the Consumer Protection Act.
C. The tension has been resolved by the Dodd-Frank Act.
D. The board has much more power today, but the tension remains. - ANSWER
D. The board has much more power today, but the tension remains.
Suppose Congress were to amend the Federal Reserve Act and set up a new
commission to reexamine the Federal Reserve district boundaries.
What considerations should the commission use in drawing the boundaries? -
ANSWER The commission should consider
, 1. the market capitalization of each bank
2. the total population of divided regions
3. the total deposits of each bank.
Suppose Congress were to amend the Federal Reserve Act and set up a new
commission to reexamine the Federal Reserve district boundaries.
Would the boundaries be considerably different than 1914 and does it matter
today as much as it did then where the districts lie? - ANSWER 1. The
boundaries would be different
2. It does not matter where the districts lie, given the information technologies
available to the system.
What is the purpose of the Government in the Sunshine Act? - ANSWER The
Government in the Sunshine Act, which required government agencies to post
meetings before they happened, was created to promote public awareness.
Was Fed Chairman Bernanke justified in evading the requirements of the
Sunshine Act during the financial crisis of 2007-2009? - ANSWER Because the
financial crisis was unfolding so quickly, one could argue that Bernanke was
justified in evading the Sunshine Act.
"Class A directors may not participate in most aspects of the appointment
process of Reserve Bank presidents and first vice
presidents."
Who are Class A directors? - ANSWER Banks
"Class A directors may not participate in most aspects of the appointment
process of Reserve Bank presidents and first vice
presidents."
What potential conflicts of interest is this section referring to? - ANSWER The
supervision of member banks
"Class A directors may not participate in most aspects of the appointment
process of Reserve Bank presidents and first vice
presidents."
If there is a conflict of interest in the governance structure of the Federal
Reserve Banks, why did Congress establish this structure when it passed the
Federal Reserve Act in 1913? - ANSWER To prevent one constituency from
Questions With Correct Answers
Why was the Federal Reserve System split into 12 districts? - ANSWER The
Federal Reserve System was split into 12 districts because there was opposition
in Congress to establishing a single, unified central bank.
What are the changes to the Fed under the Dodd-Frank Act?
A. Making the Fed a member of the new Financial Stability Oversight Council
B. Designating a Fed vice chairman for regulatory supervision.
C. Ordering the government Accountability Office to audit the emergency
lending programs the fed carried out during the financial crisis.
D. All of the Above - ANSWER D. All of the Above
Why did Congress set up a system that had this tension between the Reserve
Banks and the Federal Reserve Board? - ANSWER 1. Tension was created to
ensure that various interests would have input into the conduct of monetary
policy.
2. This was all part of the organizational plan to prevent one faction of the
banking system from having too much power.
Has the tension been resolved in the modern Fed?
A. The tension has been resolved by the FOMC.
B. The tension has been resolved by the Consumer Protection Act.
C. The tension has been resolved by the Dodd-Frank Act.
D. The board has much more power today, but the tension remains. - ANSWER
D. The board has much more power today, but the tension remains.
Suppose Congress were to amend the Federal Reserve Act and set up a new
commission to reexamine the Federal Reserve district boundaries.
What considerations should the commission use in drawing the boundaries? -
ANSWER The commission should consider
, 1. the market capitalization of each bank
2. the total population of divided regions
3. the total deposits of each bank.
Suppose Congress were to amend the Federal Reserve Act and set up a new
commission to reexamine the Federal Reserve district boundaries.
Would the boundaries be considerably different than 1914 and does it matter
today as much as it did then where the districts lie? - ANSWER 1. The
boundaries would be different
2. It does not matter where the districts lie, given the information technologies
available to the system.
What is the purpose of the Government in the Sunshine Act? - ANSWER The
Government in the Sunshine Act, which required government agencies to post
meetings before they happened, was created to promote public awareness.
Was Fed Chairman Bernanke justified in evading the requirements of the
Sunshine Act during the financial crisis of 2007-2009? - ANSWER Because the
financial crisis was unfolding so quickly, one could argue that Bernanke was
justified in evading the Sunshine Act.
"Class A directors may not participate in most aspects of the appointment
process of Reserve Bank presidents and first vice
presidents."
Who are Class A directors? - ANSWER Banks
"Class A directors may not participate in most aspects of the appointment
process of Reserve Bank presidents and first vice
presidents."
What potential conflicts of interest is this section referring to? - ANSWER The
supervision of member banks
"Class A directors may not participate in most aspects of the appointment
process of Reserve Bank presidents and first vice
presidents."
If there is a conflict of interest in the governance structure of the Federal
Reserve Banks, why did Congress establish this structure when it passed the
Federal Reserve Act in 1913? - ANSWER To prevent one constituency from
