Chapter 14 Assignment

The reserve requirement:

Affects the level of bank reserves.

The key decision maker for general Federal Reserve policy is the:

Board of Governors.

If a bank does not have enough reserves, it can:

Borrow reserves from the discount window.

If the Fed wants to increase bank reserves, it can:

Buy bonds.

The policy lever most commonly used by the Fed is:

Buying and selling bonds.

The buying and selling of government bonds to influence reserves in the banking system is the responsibility of the:

Federal Open Market Committee.

U.S. monetary policy relies on the:

Federal Reserve System's control over the money supply.

The rate of interest banks charge each other for lending reserves is the:

Federal funds rate.

The use of money and credit controls to change macroeconomic activity is known as:

Monetary policy.

If the Fed wants to reduce bank reserves, it can:

Raise the discount rate or sell bonds on the open market.

Which of the following is responsible for providing currency and cash to banks?

The Federal Reserve System.

Ceteris paribus, if the Fed reduces the discount rate, then:

The incentive to borrow funds increases.

Which of the following is not a basic monetary policy tool used by the Fed?

The income tax rate.

Ceteris paribus, if the Fed raises the reserve requirement, then:

The lending capacity of the banking system decreases.

Suppose the banks in the Federal Reserve System have $100 million in transactions accounts and the reserve requirement is 0.10. Ceteris paribus, if the reserve requirement is decreased to 0.07, then excess reserves will increase by:

$3 million.

The Board of Governors has ___ members, and they are appointed for ___ year terms.

7; 14

A change in the reserve requirement is the tool used least often by the Fed because it:

Can cause abrupt changes in the money supply.

Which of the following is not a monetary policy tool for shifting the aggregate demand curve?

Government spending.

The chairman of the Federal Reserve Board of Governors:

Serves a four-year term and can be reappointed.

Checks are cleared between private banks by:

The 12 regional Federal Reserve banks.