Central Banking Quiz

What is the role of a Central Bank?

• It is a system in which only a fraction of bank deposits are required to be available for withdrawal.

• It is a function of the Federal Reserve that offers loans to banks experiencing significant financial difficulty.

• It is a financial institution responsible for managing currency, supervision of banks and formulation of monetary policy for a nation.

• It is the amount of cash banks must have on deposit with their regional Federal Reserve Bank.

What does the Federal Open Market Committee (FOMC) do?

• It oversees the 12 reserve banks and the broader Federal Reserve System.

• It determines monetary policy and sets interest rates.

• It securely transfers funds between two parties.

• It charges interest on loans banks receive from the Federal Reserve.

What is the purpose of the Lender of Last Resort?

• To manage the nation's money supply.

• To offer loans to banks experiencing significant financial difficulty or nearing collapse.

• To charge interest on loans banks receive from the Federal Reserve.

• To ensure a fraction of bank deposits are available for withdrawal.

What is Fractional Reserve Banking?

• A financial institution responsible for managing currency and formulating monetary policy.

• A sequence of actions that securely transfer funds between two parties.

• A system in which only a fraction of bank deposits are required to be available for withdrawal so that those deposits can create loans.

• The amount of cash banks must have on deposit with the Federal Reserve.

What is the Reserve Requirement?

• The interest charged to banks on loans they receive from the Federal Reserve.

• The sequence of actions that securely transfer funds between two parties.

• The amount of cash banks must have on deposit with their regional Federal Reserve Bank.

• A set of tools used by the Federal Reserve to influence the economy.

What is the Discount Rate?

• The sequence of actions that securely transfer funds between two parties.

• The amount of cash banks must have on deposit with the Federal Reserve.

• The interest charged to banks on loans they receive from the Federal Reserve.

• A system in which only a fraction of bank deposits are required to be available for withdrawal.