Banking Section Test Question Preview (ID: 13457)

Banking Section Unit Test Review.

Which one is the principal monetary tool used by the Fed?
a) open market operation
b) reserve rate
c) federal funds rate
d) discount rate

____ represents the percent of a bank's reserves held in its vaults.
a) RRR
b) overnight loan
c) federal funds rate
d) discount rate

The percent of interest the Fed charges commercial banks on overnight loans is the
a) federal funds rate
b) overnight rate
c) reserve rate
d) discount rate

Which of the following is NOT one of the three tools used by the Fed to work with the money supply?
b) RRR
c) discount rate and target federal funds rate
d) open market operation

Control of the country's money supply for the purpose of promoting economic growth is
a) monetary policy
c) Federal Reserve
d) money supply

What is the role of the FOMC?
a) control country's monetary policy
b) provide expertise on local economies
c) store excess money from banks
d) conduct research on local economies

Why was the Federal Reserve created?
a) because of financial crisis caused by bank runs
b) because of the need to promote economic growth
c) because of the need to store excess money
d) because of the need to process electronic payments

The Federal Reserve was created in the year _____.
a) 1913
b) 1910
c) 1911
d) 1912

Which of the following is NOT part of the Federal Reserve?
a) commercial banks
b) Board of Governors
c) twelve regional reserve banks

When many people rush to a bank to withdraw deposits at the same time it is called a
a) bank run
b) discount run
c) state run
d) federal run

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