Question

1. O’Driscoll argues that a central bank is _____ for the development of a modern economy.

a. necessary but not sufficient

b. necessary and sufficient

c. effective and efficient

d. neither necessary nor sufficient

e. not necessary but sufficient

2. The founder and president of this bank were delegates to the Continental Congress that issued the Declaration of Independence:

a. The Bank of North America.

b. The Second Bank of the United States.

c. The Third Bank of the United States.

d. Wells Fargo Bank.

e. The Bank of England.

3. Following the reorganization of the Fed during the Great Depression:

a. the Treasury Secretary was no longer a member of the Board of Governors.

b. the Comptroller of the Currency was no longer a member of the Board of Governors.

c. The FOMC was created to conduct open market operations.

d. All of the above.

e. Only A and B of the above.

4. When the Federal Reserve buys and sells securities, this is called a/an:

a. Treasury accommodation.

b. accounting adjustment.    

c. credit default swap.

d. money laundering scheme.

e. open market operation.

5. In 2007, the largest valued liability item on the Fed’s balance sheet was:

a. Bank reserve deposits.

b. Treasury Department deposits.

c. Federal Reserve Notes.

d. Mortgage-backed securities.

e. Gold certificates.

6. Since the Fed was created, the value of a dollar has:

a. fallen by about 95%.

b. fallen by about 50%.

c. fallen by about 18%.

d. risen by about 25%.

e. risen by about 40%.

7. Over the last four recessions (1982, 1991, 2001, 2008) the Federal Reserve has:

a. lowered the federal funds rate to a low of 1% each time.

b. lowered the federal funds rate more and more each time, most recently to about zero.

c. lowered the federal funds rate by less and less each time and now it is about 5%.

d. refused to change the federal funds rate, allowing the market to determine its value.

e. always sold bonds to try and stem the forces of recession.

Answer 1

Answer 1

(a)O’Driscoll argues that a central bank is necessary but not sufficient for the development of a modern economy. The reason is that central bank is necessary till the existence of fiat money.

Answer 2

( A) Bank of North America founder and president were delegates to the Continental Congress that issued the Declaration of Independence:

Answer 3

(d) all of above

Answer 4

(e) Open market operation- It deals with sale and purchase of securities by federal bank.

Answer 5

(c) Federal reserve notes

Answer 6

(d) 25%