1. Which of the following is a commercial bank's largest liability and source of funds?

   		Loans from the Federal Reserve
   		Checking Deposits and other Deposits
   		Repo transactions
   		Loans from other banks

0.4 points

QUESTION 2

1. True or False: When the Federal Reserve buys US Treasury Securities from banks, there is a reduction in the money supply (i.e., M1 and/or M2).

   True

   False

0.4 points

QUESTION 3

1. True or False: US Corporates raise more funds from bank borrowing with support from the Federal Reserve than from the capital markets.

   True

   False

0.4 points

QUESTION 4

1. True or False: A bank's assets are its sources of funds.

   True

   False

0.4 points

QUESTION 5

1. True or False: Currently in FOMC meetings, the Federal Reserve Board Governors have a majority vote in FOMC meetings

   True

   False

0.4 points

QUESTION 6

1. Which Federal Reserve Bank President is always a voting member of the FOMC?

   		The Federal Reserve Bank of the United States
   		The Federal Reserve Bank of Washington, DC
   		The Federal Reserve Bank of New York
   		The Federal Reserve Bank of St. Louis

0.4 points

QUESTION 7

1. True or False: Each quarter of the financial cycle, the U.S. Treasury determines the amount of cash needed in the economy and releases that cash to the US Federal Reserve. The Federal Reserve then decides how much of that cash to supply to banks (through US treasury bond purchases or sales and other asset purchases or sales) in order to increase or decrease the monetary base (i.e., M1 and M2), depending on economic conditions.

   True

   False

0.4 points

QUESTION 8

1. True or False: Federal Reserve independence enables the Federal Reserve to operate without having to be concerned about the actions of the House and Senate.

   True

   False

0.4 points

QUESTION 9

1. What is included in the Monetary Base (otherwise known as high powered money) ?

   		Currency in circulation, and reserves
   		Bank vault cash and deposit accounts
   		Wire transfers and checks
   		Pension funds and insurance funds

0.4 points

QUESTION 10

1. In order to reduce the likelihood of excessive risks in the banking system, US government regulation has traditionally done which of the following?

   		Required investment banks to have sufficient checking account deposits to cover their trading portfolios
   		Required non-bank financial institutions to hold required reserves on deposits
   		Imposed capital requirements and reserve requirements on commercial and retail banks

0.4 points

QUESTION 11

1. When banks borrow money from the Federal Reserve, these funds are called

   		discount loans
   		federal funds
   		federal loans
   		Treasury funds

0.4 points

QUESTION 12

1. The strongest argument for an independent Federal Reserve rests on the view that subjecting the Fed to more political pressures would impart

   		a countercyclical bias to monetary policy
   		a deflationary bias to monetary policy
   		a disinflationary bias to monetary policy
   		an inflationary bias to monetary policy

0.4 points

QUESTION 13

1. True or False: If the public response to the Covid Pandemic is to hoard not only toilet paper but also cash (bills and coins), this increase in the demand for cash will cause a decline in the money multiplier.

   True

   False

0.4 points

QUESTION 14

1. Which of the following activities has NOT traditionally been a primary concern of investment banks?

   		Taking deposits and making loans
   		Underwriting new security issues
   		Providing advice and financing for mergers and acquisitions
   		Providing advice on new security issues

0.4 points

QUESTION 15

1. True or False: Recently many large commercial and retail banks have been choosing to increase the amount of excess reserves they hold in the Federal Reserve, and this has caused an increase in the money multiplier and the money supply.

   True

   False

0.4 points

QUESTION 16

1. Which of the following is an example of moral hazard?

   		A person with a pre-existing heart condition has trouble getting health insurance
   		Bank managers who are compensated with high bonuses for high bank profits may take on more risk than shareholders prefer
   		A man with huge losses in Las Vegas hides his financial condition while applying for a home mortgage

0.4 points

QUESTION 17

1. Purchases and sales of government securities by the Federal Reserve are called

   		open market operations
   		federal fund transfers
   		discount loans
   		swap transactions

0.4 points

QUESTION 18

1. True or False: A decrease in required reserves will decrease the money multiplier.

   True

   False

0.4 points

QUESTION 19

1. Which of the following is a commercial banks largest asset and use of funds?

   		cash reserves
   		Equity funds and other stock-based investments
   		Debt securities
   		Loans

0.4 points

QUESTION 20

1. True or False: US interest rates are entirely under the control of the Federal Reserve, primarily through it's control of the US dollar money supply, but also through its regulatory actions.

   True

   False