1. Why was the Federal Reserve System set up with twelve regional Federal Reserve banks rather than one centralbank, as in othercountries?

A.

The writers of the Federal Reserve Act wanted to ensure theFed's power was not centralized in a single location.

B.

By creating twelve regionalbanks, writers of the Federal Reserve Act could ensure that finances from all parts of the country would flow through the Federal Reserve System.

C.

With twelve regionalbanks, employees of the Federal Reserve could quickly and easily get to a monetary crisis point anywhere in the United States.

D.

With twelve regionalbanks, the Federal Reserve could easily influence politics in all parts of the United States.

2.Which of the following statements istrue, in historicalterms, about the relationship between the US President and the Chairman of the Federal ReserveSystem?

A.

The Chair of the Federal Reserve and the President are always in agreement about economic policy.

B.

With the independence of theFED, both always agree on what needs to be done.

C.

The two can often be in disagreement.

D.

Both live in the White House and have unlinited use of Air Force One.

Members of Congress are able to influence monetarypolicy, albeitindirectly, through their ability to

3.Why is the New York Federal Reserve always a voting member on theFOMC?

A.

The New York Federal Reserve district contains many of the largest commercial banks in the United States.

B.

The New York Federal Reserve is actively involved in the bond and foreign exchange markets.

C.

It is the only Federal Reserve bank that is a member of the Bank for International Settlements(BIS).

D.

Only A and C are correct.

E.

All of the above are correct.