Which of the Following Statements Comparing the European System of Central

question 36

Multiple Choice

Which of the following statements comparing the European System of Central Banks and the Federal Reserve System is TRUE?

• A) The budgets of the Federal Reserve Banks are controlled by the Board of Governors, while the National Central Banks control their own budgets and the budget of the European Central Bank.
• B) The European Central Bank has similar power over the National Central Banks when compared to the level of power the Board of Governors has over the Federal Reserve Banks.
• C) Just like the Federal Reserve System, monetary operations are centralized in the European System of Central Banks with the European Central Bank.
• D) The European Central Bank's involvement in supervision and regulation of financial institutions is comparable to the Board of Governors' involvement.

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Definitions:

Variable Cost

A cost that changes in proportion to the level of output or activity in a business.

Monthly Interest Rate

The percentage of interest that is charged or earned on a principal amount on a monthly basis.

Credit

An arrangement where goods, services, or money is received in exchange for a promise to pay back a definite sum of money at a future date.

Annual Percentage Rate

A measure of the cost of borrowing, including interest and other fees, represented as a yearly rate and providing a comprehensive view of the loan cost.