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Free U.S. Federal Reserve Bank Financial Analyst Exam Exam Questions and Answers
Last updated: March 31, 2025
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U.S. Federal Reserve Bank
Financial Analyst Exam
#Question
What is the purpose of the Federal Reserve's role as a lender of last resort?
A.
To regulate interest rates
B.
To increase government spending
C.
To support banks during financial distress
D.
To provide loans to consumers
Correct Answer:
C
The Federal Reserve serves as a lender of last resort to support banks and financial institutions during periods of financial distress, helping to maintain stability in the financial system.
#Question
What would likely happen if the Federal Reserve maintains low-interest rates for an extended period?
A.
Lower investment in the economy
B.
Higher unemployment rates
C.
Increased inflation
D.
Decreased consumer confidence
Correct Answer:
C
Maintaining low-interest rates for an extended period can lead to increased inflation as demand rises and the money supply expands.
#Question
Which of the following is an example of a lagging economic indicator?
A.
Unemployment rate
B.
Stock market performance
C.
GDP growth
D.
Consumer spending
Correct Answer:
A
The unemployment rate is considered a lagging indicator because it reflects changes in the economy that have already occurred.
#Question
What is a "bond yield"?
A.
The price of a bond
B.
The interest income earned from holding a bond, expressed as a percentage
C.
The risk premium associated with a bond
D.
The total return from buying and selling bonds
Correct Answer:
B
A bond yield represents the interest income earned from holding a bond, expressed as a percentage of its current price.
#Question
How does the Federal Reserve use the "Taylor Rule"?
A.
To set fiscal policy
B.
To guide interest rate decisions based on economic conditions
C.
To regulate inflation rates directly
D.
To monitor international trade
Correct Answer:
B
The Taylor Rule is used to guide the Federal Reserve's interest rate decisions based on deviations from target inflation and output levels.
#Question
Which of the following actions can the Federal Reserve take to increase the money supply?
A.
Decrease government spending
B.
Increase reserve requirements
C.
Buy government securities
D.
Raise the discount rate
Correct Answer:
C
Buying government securities increases the money supply because it injects liquidity into the banking system.
#Question
What does "negative interest rate policy" mean?
A.
Banks charge depositors for holding money
B.
Both A and C
C.
Banks pay high interest on savings accounts
D.
Interest rates are below zero
Correct Answer:
B
A negative interest rate policy means that banks may charge depositors for holding money, effectively paying less interest or charging fees, which can stimulate spending.
U.S. Federal Reserve Bank Financial Analyst Exam
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