Question 1

The word "fractional" in Fractional Reserve Banking system means_________________

Group of answer choices

a fraction of the bank's profit must be donated to charity

a fraction of the bank's clients should receive no interests

a fraction of the bank's deposits must be kept as reserves, which cannot be lent out

a fraction of the bank's income must be paid to the government

Question 2

If the Central Bank increases the Reserve Requirement Ratio for all commercial banks in the country, then which of the following will likely happen?

Group of answer choices

commercial banks have more money to make loans.

the interest rate will increase

bank runs are more likely to break out

all of the above are correct

Question 3

If the Central Bank believes the unemployment rate is too high, which of the following policies can they use to boost economic and employment growth?

Group of answer choices

increase banks' Reserve Requirement Ratio

print more money, and use the money to issue loans to governments, firms, and individuals

try to increase the interest rates of savings

all of the above are correct

Question 4

U.S. did not have a permanent Central Bank before 1913, largely due to the fear of _____________ and distrust of moneyed interests in the society.

Group of answer choices

non-government power

centralized power

foreign control

unorganized market

Question 5

The Fed is consisted of twelve ___________________________

Group of answer choices

branches across the country

departments in D.C.

offices in the N.Y.C.

headquarters all over the world

Question 6

The design of the Fed was intended to diffuse power __________________________

Group of answer choices

along regional lines

between the military force and the civil government

among saver-lenders only

all of the above

Question 7

Suppose Ag First Bank is a commercial bank located in Fresno, CA. If Ag First Bank is temporary short of cash and is looking for some loans, what should it do?

Group of answer choices

It should ask for loans from the Federal Reserve Bank of Fresno

It should ask for loans from the Headquarters of the Federal Reserve System

It should ask for loans from the Federal Reserve Bank of San Francisco

Unfortunately, no agency can make loans to a commercial bank...

Question 8

Which of the following is most accurate about the Board of Governors (BOG) of the Fed?

Group of answer choices

It is the head of the Fed

It has seven members (governors), each of whom is appointed by the president and confirmed by the regional states.

The chair of the BOG is chosen from among the seven governors, and serves a life-long tenure once appointed

All of the above are correct

Question 9

Which of the following situations may most likely lead to a conflict between the Fed and the U.S. President regarding monetary policies?

Group of answer choices

The inflation rate is 5%, and the U.S. President is facing a re-election

The inflation rate is 0.5%, and the U.S. President is facing a re-election

The inflation rate is 5% at the end of the President's 2nd term.

The inflation rate is 0.5% at the end of the President's 2nd term.

Question 10

Which of the following is a common reason why some people do NOT support the independence of the Fed?

Group of answer choices

Fed independence is undemocratic

As the US President and Congress are responsible for the state of the economy, they should have full control over the tools to direct the economy.

The Fed can also make mistakes.

all of the above