Question

QUESTION 1

1. Even though the Fed was created in 1913, while we were still on the gold standard, it didn’t need to hold any gold reserves for the notes it created.

True

False

True

False

1 points   

QUESTION 2

1. From 1914 until 1920, the level of total bank demand deposits (checking accounts) rose by over two hundred percent, while currency in circulation hardly changed at all, rising only by 5.4%.

True

False

1 points   

QUESTION 3

1. The most powerful figure in the early Fed was Benjamin Strong, Governor of the Boston Federal Reserve Bank.

True

False

1 points   

QUESTION 4

1. It is rare that a central bank will have as one of its duties the regulation of commercial banks.

True

False

1 points   

QUESTION 5

1. As noted in the text, we are most in need of a central bank to regulate the money supply when we have fixed exchange rates.

True

False

1 points   

QUESTION 6

1. There are 49 Federal Reserve District Banks, one in every state except for Alaska.

True

False

1 points   

QUESTION 7

1. Among other important central banks around the world are the European Central Bank and the Bank of England.

True

False

1 points   

QUESTION 8

1. Among the various characteristics that would tell someone that a central bank has a high degree of independence is if it has control over its own budget.

True

False

Answer 1

Question 1

False

Even though the Fed was created in 1913, while we were still on the gold standard, it didn’t need to hold any gold reserves for the notes it created. This statement is not correct. The gold standard was ended by the end of 1960. At that time, fed has the gold reserves of approx $20 billion. The government kept on encouraging to increase the gold reserves for the notes. Even FDR told FED to convert their gold into the paper currency.

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