Week 4 Flashcards
The financial panic of 1907 resulted in such widespread bank failures and substantial losses to depositors that the American public finally became convinced that
a central bank was needed to prevent future panics.
All ________ are required to be members of the Fed.
national banks chartered by the Office of the Comptroller of the Currency
Banks subject to reserve requirements set by the Federal Reserve System include
all banks whether or not they are members of the Federal Reserve System.
The Depository Institutions Deregulation and Monetary Control Act of 1980
established uniform reserve requirements for all banks.
The Federal Reserve Bank of ________ houses the open market desk.
New York
There are ________ members of the Board of Governors of the Federal Reserve System.
7
The ability of a central bank to set monetary policy goals is
goal independence.
Critics of the current system of Fed independence contend that
the current system is undemocratic.
The political business cycle refers to the phenomenon that just before elections, politicians enact ________ policies. After the elections, the bad effects of these policies (for example, ________ ) have to be counteracted with ________ policies.
expansionary; a higher inflation rate; contractionary
The theory of bureaucratic behavior suggests that the objective of a bureaucracy is to maximize
its own welfare.
The central bank which is generally regarded as the most independent in the world because its charter cannot be changed by legislation is the
European Central Bank.
Regarding central bank independence
the European Central Bank is more independent than the Fed.
The oldest central bank, having been founded in 1694, is the
Bank of England.
Of all commercial banks, about ________ belong to the Federal Reserve System.
one third
Which of the followings is NOT a current duty of the Board of Governors of the Federal Reserve System?
setting the maximum interest rates payable on certain types of time deposits under Regulation Q
