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2. Question 1 The structure of the Federal Reserve includes: 12 district banks, 24 branches, the Board of Governors, and the FOMC A 24 district banks and the Board of Governors The FOMC, 12 district banks, and 24 branches

3. The Federal Reserve is comprised of a Board of Governors located in Washington, D.C.; 12 Federal Reserve banks; 24 branches within the 12 districts; and the Federal Open Market Committee. Next

4. Try again! The 24 branches in the 12 districts and the Board of Governors do comprise part of the Federal Reserves structure, but there are other components as well. Back

5. Try again! The Federal Open Market Committee, 12 district Federal Reserve Banks, and 24 branches do comprise part of the Federal Reserves structure, but there is another component as well. Back

6. Question 2 District Bank presidents A Board of Governors B Federal Open Market Committee members C

7. Try again! Five of the district Federal Reserve Bank presidents do sit on the Federal Open Market Committee, but they are not appointed by the U.S. president nor are they confirmed by the Senate for 14 years. Back

8. Correct! Next

9. Try again! The Federal Open Market Committee con- sists of the Board of Governors and five of the district Federal Reserve Bank presi- dents, for a total of 12 voting members. District Federal Reserve Bank presidents are not appointed by the U.S. president, nor are they confirmed by the Senate for 14 years. Back

10. Question 3 The nations monetary policy is conducted by: The Feds Board of Governors A The president and Congress B The Federal Reserves Open Market Committee C

11. Try again! Back

12. Correct! Next

13. Try again! The U.S. president and Congress are responsible for fiscal policy, or changes in the rules and rates for taxation and in levels of government spending. Back

14. Question 4 The Federal Open Market Committees voting members are: The Board of Governors and 12 district presidents A The Board of Governors and five district presidents B The district bank presidents C

15. Try again! The FOMC does include the seven members of the Board of Governors. However, while all 12 Reserve Bank presidents attend and participate in the FOMC meetings, they do not all have a vote each year. Back

16. Correct! The FOMC comprises the seven members of the Board of Governors and five of the 12 Reserve Bank presidents. The president of the New York Fed is a permanent member of the FOMC because of that banks role in open market operations. The other 11 bank presidents serve on a rotating annual basis. The FOMC directs open market operations, which are carried out through Federal Reserve Bank of New Yorks Trading Desk. Next

17. Try again! While all 12 Reserve Bank presidents attend and participate in the FOMC meetings, they do not all have a vote each year. Back

18. Question 5 Because Reserve Banks are owned by member banks while governors are political appointees, the Fed is: A quasi-governmental institution A A for-profit organization B A limited liability company C

19. Correct! The Fed is a mixture of public and private elements. A factor that promotes the Feds political independence is that the Fed does not have to rely on appropriations from Congress. The Fed is financially self- sufficient. Its income comes predominantly from interest it receives on its holdings of U.S. government securities. Next

20. Try again! Reserve Banks are owned by member banks, while governors are political appointees. The Federal Reserve System funds its operations with revenue from the interest earned from its holdings of U.S. Treasury securities and fees earned from the payment services it provides to banks, not congressional budget appropriations. Back

21. Try again! Reserve Banks are owned by member banks, while governors are political appointees. The Fed funds its operations with revenue from the interest earned from its holdings of U.S. Treasury securities and fees earned from the payment services it provides to banks, not congressional budget appropriations. Back

22. Question 6 The functions of the Federal Reserve are: The buying and selling of stock in the open market A FOMC, district banks, and payment services B Monetary policy, payment services, and bank supervision and regulation C

23. Try again! The Federal Reserve does not buy and sell stock in the open market. The buying and selling of stock in the United States takes place in organized stock markets that are regulated by the Securities and Exchange Commission. Back

24. Try again! The FOMC conducts monetary policy. The Fed also conducts payment services to banks, services that are carried out by each of the 12 district banks. However, these are only two of the Feds three primary functions. Back

25. Correct! The three main functions of the Federal Reserve System are monetary policy (conducted by the FOMC), payment services (which includes cash services to banks, including clearing one-third of the nations checks and processing electronic payments), and bank supervision and regulation. Next

26. Question 7 The goals of monetary policy are: Maximum economic growth and employment and stable prices A Influencing the money supply B Stable prices and open market operations C

27. Correct! The Federal Reserve has a dual mandate. The Federal Reserve Act specifies that the role of the Fed (and monetary policy) is to promote maximum employment and stable prices. The Fed does this by influencing the supply of money and credit in the economy. Next

28. Try again! The Fed achieves its goal by influencing the supply of money and credit in the economy, but that is not a goal in and of itself. Back

29. Try again! The Federal Reserves dual mandate includes a goal of maintaining stable prices and open market operations are a tool used to meet that goal, but these are not the entire mandate for monetary policy given to the Federal Reserve by Congress in 1977. Back

30. Question 8 The function of the Fed that includes being the bankers bank is: Monetary policy A Supervision and regulation B Payment services C

31. Monetary policy is the function of maintaining maximum economic growth and employment and stable prices by influencing the supply of money and credit in the economy. Back

32. Try again! Supervision and regulation addresses the safety and soundness of the financial system. The Fed does this by fostering safe, sound and competitive practices in the nations banking system. The Feds responsibility is to regulate the banking system and to supervise certain types of financial institutions. Back

33. Correct! The Reserve Banks operate as bankers banks, offering a wide variety of financial services. They distribute currency and coin, process checks, and offer electronic forms of payment. They also compete with private sector financial services to foster competition, safety, and efficiency in the payments system. Next

34. Question 9 Which of the following financial institutions are regulated by the Federal Reserve? All types of financial institutions are regulated by the Fed A National banks B International banking organizations C

35. Try again! The Federal Reserve does not regulate all financial institutions in the United States. Other agencies that regulate financial institutions include the Federal Deposit Insurance Corporation (FDIC), state bank regulators, the Consumer Financial Protection Bureau, and the Office of the Comptroller of the Currency (OCC). Back

36. Try again! The Office of the Comptroller of the Currency regulates national banks. Back

37. Correct! The Federal Reserve Board supervises state- chartered banks that are members of the Federal Reserve System, bank holding companies, and international banking organizations. The goal of bank supervision is to minimize risk in the banking system. Next

38. Question 10 Which of the following was NOT established as consequence of the Wall Street Reform and Consumer Protection Act (also known as the Dodd-Frank Act)? The Bureau of Consumer Financial Protection A The Financial Stability and Oversight Council B The Feds dual mandate C

39. Try again! This 2010 legislation established the Bureau of Consumer Financial Protection to provide consumers with the information they need to make informed financial decisions. Back

40. Try again! The Dodd-Frank Act established the Financial Stability Oversight Council to ensure the stability of our financial system through enhanced monitoring of financial institutions. The council includes 10 voting members and five nonvoting members, and is made up of federal and state financial regulators as well as an insurance expert that the U.S. president appoints. Back

41. Correct! With the passage of the Humphrey-Hawkins Act in 1978, the Federal Reserves dual mandate became official. This act states that the monetary policy objectives of the Federal Reserve are to maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates. This mandate guides the monetary policy decision making of the Federal Reserve. Next

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