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:

Risk-Free Asset

An investment with a certain return and virtually no risk of financial loss.

Expected Rate

The forecasted return rate on an investment over a specified period.

Standard Deviation

A statistical measure that represents the dispersion or variability of a set of data points or the distribution around the mean.

Risk-Free Asset

An investment that provides a guaranteed return with no chance of loss.