UPSC Prelims Practice Questions — Jerome Powell’s tenure as Fed chief, bookended by Trump, nears end
Q1. For approximately how many years did Jerome Powell serve as Chair of the U.S. Federal Reserve before his chairmanship ended in 2026?
- A. Four years
- B. Six years
- C. Eight years
- D. Ten years
Q2. The appointment of a nominee as Chair of the U.S. Federal Reserve becomes effective only after confirmation by which of the following?
- A. The United States Senate
- B. The United States House of Representatives
- C. The Federal Open Market Committee
- D. The Board of Governors of the Federal Reserve
Q3. The Federal Reserve System, the central bank of the United States, was established under which of the following?
- A. The Federal Reserve Act, 1913
- B. The Glass-Steagall Act, 1933
- C. The Dodd-Frank Act, 2010
- D. The Federal Reserve Act, 1935
Q4. With reference to the governance structure of the U.S. Federal Reserve, consider the following statements:
1. The Board of Governors has seven members, each appointed for a 14-year term.
2. The Chair of the Board of Governors is appointed for a 14-year term.
3. The Federal Open Market Committee has twelve members.
4. Governors of the Federal Reserve are nominated by the President and confirmed by the House of Representatives.
Which of the above is/are correctly identified?
- The Board of Governors has seven members, each appointed for a 14-year term.
- The Chair of the Board of Governors is appointed for a 14-year term.
- The Federal Open Market Committee has twelve members.
- Governors of the Federal Reserve are nominated by the President and confirmed by the House of Representatives.
- A. 1 and 3
- B. 2 and 4
- C. 1, 2 and 4
- D. 3 only
Q5. Consider the following statements comparing the U.S. Federal Reserve and the Reserve Bank of India:
1. The Governor of the RBI is appointed by the Central Government, whereas the Chair of the U.S. Federal Reserve is nominated by the President and confirmed by the Senate.
2. Members of the RBI's central board are appointed for four-year terms, while members of the Federal Reserve's Board of Governors serve 14-year terms.
3. The RBI's Monetary Policy Committee has the same number of members as the Federal Reserve's Federal Open Market Committee.
Which of the statements given above is/are correct?
- The Governor of the RBI is appointed by the Central Government, whereas the Chair of the U.S. Federal Reserve is nominated by the President and confirmed by the Senate.
- Members of the RBI's central board are appointed for four-year terms, while members of the Federal Reserve's Board of Governors serve 14-year terms.
- The RBI's Monetary Policy Committee has the same number of members as the Federal Reserve's Federal Open Market Committee.
- A. 1 and 2 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1, 2 and 3
Q6. The six-member Monetary Policy Committee of the Reserve Bank of India derives its statutory basis from which of the following?
- A. Section 45ZB of the Reserve Bank of India Act, 1934
- B. Section 45ZB of the Banking Regulation Act, 1949
- C. Section 45ZB of the Reserve Bank of India Act, 1935
- D. Section 45ZB of the Foreign Exchange Management Act, 1999
Q7. Who was the first woman to serve as Chair of the U.S. Federal Reserve?
- A. Janet Yellen
- B. Alice Rivlin
- C. Christine Lagarde
- D. Esther George
Q8. In the context of the 2026 Federal Reserve leadership transition, the term 'chair pro tempore' most precisely refers to which of the following?
- A. A temporary chair who leads the Board only until a confirmed successor is sworn in
- B. A deputy who permanently chairs the FOMC whenever the Chair is absent
- C. The senior-most regional Reserve Bank president automatically acting as Chair
- D. An honorary lifetime title conferred on a retired Federal Reserve Chair
Q9. By what vote margin did the United States Senate confirm Kevin Warsh as Chair of the Federal Reserve in 2026?
- A. 54–45
- B. 60–40
- C. 68–31
- D. 50–49
Q10. The criminal investigation into Jerome Powell opened in January 2026 was centred on which of the following?
- A. His congressional testimony about the scope and costs of the Federal Reserve headquarters renovation
- B. Alleged insider trading based on advance knowledge of FOMC rate decisions
- C. Losses incurred on the Federal Reserve's balance sheet during rate hikes
- D. A conflict of interest in the Fed's supervision of commercial banks
Q11. With reference to the friction between President Trump and Chair Powell over Federal Reserve independence, consider the following statements:
1. Trump repeatedly criticised Powell over the Federal Reserve's interest-rate decisions.
2. Powell asserted that the President is not permitted under law to fire or demote him.
3. Powell said the outcome of the 2024 presidential election would have 'no effect' on near-term rate decisions.
4. Powell resigned as Chair immediately after Trump's 2024 election victory.
Which of the above is/are correctly identified?
- Trump repeatedly criticised Powell over the Federal Reserve's interest-rate decisions.
- Powell asserted that the President is not permitted under law to fire or demote him.
- Powell said the outcome of the 2024 presidential election would have 'no effect' on near-term rate decisions.
- Powell resigned as Chair immediately after Trump's 2024 election victory.
- A. 1, 2 and 3
- B. 1, 2 and 4
- C. 2, 3 and 4
- D. 1, 3 and 4
Q12. The following are described as measures forming part of the Federal Reserve's pandemic-era (2020) monetary response under Powell EXCEPT one. Consider:
1. Cutting the federal funds rate to near zero in March 2020.
2. Purchasing Treasury securities and mortgage-backed securities.
3. Purchasing municipal bonds and corporate debt through emergency lending programmes.
4. Raising the federal funds rate ten times to shrink the balance sheet in 2020.
Which of the above is/are NOT correct?
- Cutting the federal funds rate to near zero in March 2020.
- Purchasing Treasury securities and mortgage-backed securities.
- Purchasing municipal bonds and corporate debt through emergency lending programmes.
- Raising the federal funds rate ten times to shrink the balance sheet in 2020.
- A. 1 only
- B. 4 only
- C. 2 and 3
- D. 1 and 4