#1
Which of the following is a primary function of the Federal Reserve System?
Issuing currency
ExplanationControl over the nation's money supply.
#2
In the context of the Federal Reserve, what is the 'Beige Book'?
A summary of economic conditions
ExplanationReport on regional economic trends.
#3
What is the primary tool used by the Federal Reserve for influencing short-term interest rates?
Open market operations
ExplanationDirect control over interest rates.
#4
What does the term 'quantitative easing' refer to in the context of the Federal Reserve?
Increasing the money supply by buying financial assets
ExplanationExpansionary monetary policy.
#5
In the context of the Federal Reserve, what does the term 'dual mandate' mean?
Pursuing both maximum employment and price stability
ExplanationDual objectives for monetary policy.
#6
What is the main tool used by the Federal Reserve to control the money supply?
Open market operations
ExplanationBuying and selling government securities.
#7
In the context of the Federal Reserve, what does 'FOMC' stand for?
Federal Open Market Committee
ExplanationPolicy-making body responsible for monetary policy decisions.
#8
What is the dual mandate of the Federal Reserve?
Stable prices and maximum employment
ExplanationGoals for economic stability.
#9
What role does the Federal Reserve play in clearing and settling payments between banks?
Operating the check clearing system
ExplanationEnsuring smooth interbank transactions.
#10
What is the purpose of the Federal Reserve's open market operations?
To regulate interest rates
ExplanationAdjusting money supply to influence rates.
#11
What is the purpose of the discount rate set by the Federal Reserve?
To encourage borrowing from commercial banks
ExplanationDetermines interest rate for loans from the Fed.
#12
Which of the following is NOT a tool of monetary policy used by the Federal Reserve?
Fiscal stimulus
ExplanationGovernment spending and tax cuts.
#13
Which of the following is a macroprudential tool used by the Federal Reserve for financial stability?
Stress tests
ExplanationAssessing banks' ability to withstand crises.
#14
What is the primary purpose of the Federal Reserve's supervisory role over banks?
To ensure financial stability
ExplanationPreventing bank failures and crises.
#15
How does the Federal Reserve influence the money supply through reserve requirements?
By changing the percentage of deposits banks must hold as reserves
ExplanationRegulating banks' cash reserves.