Quiz 5: VERSION A Name___________________________showing page 2 out of 2

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9) The Federal Open Market Committee consists of the _________.
A) seven members of the Board of Governors and seven presidents of the regional Fed banks.
B) five senior members of the seven-member Board of Governors.
seven members of the Board of Governors and five presidents of the regional Fed banks.
D) twelve regional Fed bank presidents and the chairman of the Board of Governors.
10) The case for Federal Reserve independence does not include the idea that ________.
A) political pressure would impart an inflationary bias to monetary policy.
policy is always performed better by an elite group such as the Fed.
C) a politically insulated Fed would be more concerned with long-run objectives and thus be a
defender of a sound dollar and a stable price level.
D) a Federal Reserve under the control of Congress or the president might make the so-called
political business cycle more pronounced.
11) Recent research indicates that inflation performance (low inflation) has been found to be best in
countries with ________.
A) a policy of always keeping interest rates low.
B) money financing of budget deficits.
C) political control of monetary policy.
the most independent central banks.
12) The three players in the money supply process include
A) banks, depositors, and borrowers.
banks, depositors, and the central bank.
C) banks, borrowers, and the central bank.
D) banks, depositors, and the U.S. Treasury.
13) Both ________ and ________ are Federal Reserve assets.
A) securities; reserves
B) currency in circulation; reserves
securities; loans to financial institutions
D) currency in circulation; securities
14) The monetary base consists of ________.
A) currency in circulation and the U.S. Treasury's monetary liabilities.
currency in circulation and reserves.
C) currency in circulation and Federal Reserve notes.
D) reserves and Federal Reserve Notes.
15) Total reserves are the sum of ________ and ________.
A) required reserves; currency in circulation
B) excess reserves; borrowed reserves
excess reserves; required reserves
D) vault cash; excess reserves