Chapter 14 Monetary Policy and Fed macroeconomics

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Regional Fed banks

clear checks between private banks

Members of the Federal Reserve Board of Governors are appointed for one fourteen-year term

in an effort to isolate the Fed from political pressures

Which of the following is true about an increase in the discount rate?

it signals the federal reserve's desire to restrain money growth

If the Fed wishes to decrease the money supply it can

raise the discount rate

The money supply (M2) includes M1 plus balances in

saving accounts and money market mutual funds

The chairman of the Federal Reserve Board of Governors

serves a four-year term and can be reappointed

All of the following are tools available to the Fed for controlling the money supply except

taxes

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

taxes

which of the following is responsible for the Fed's daily activity in financial markets?

the FOMC

Which of the following is true about the chairman of the Federal Reserve Board of Governors?

the chairman can be reappointed for more than one term

Which of the following is responsible for buying and selling government securities to influence reserves in the banking system?

the federal open market committee

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

The Board of Governors consists of

7 members, appointed for 14-year terms.

In order to decrease the money supply, the Fed can

Raise the reserve requirement, increase the discount rate, or sell bonds.

To decrease the money supply, the Fed can

Raise the reserve requirement, raise the discount rate, or sell bonds.

The money supply (M1) includes currency held by the public plus

Transactions accounts plus travelers checks.

Which of the following is NOT true about the members of the Federal Reserve Board of Governors?

They each serve as chairman of the Board of Governors on a rotating basis.

The Federal Open Market Committee includes

All 7 governors and 5 of the regional Reserve bank presidents.

Members of the Board of Governors are

Appointed by the president and confirmed by the Senate.

Which of the following services is performed by the regional Federal Reserve banks?

providing currency to private banks

In order to increase the money supply, the Fed can

Lower the reserve requirement, decrease the discount rate, or buy bonds.

Currency held by the public plus balances in transactions accounts plus travelers checks is the definition of

M1

The M2 money supply is defined as

M1 plus balances in most savings accounts and money market mutual funds.

A reduction in the discount rate

Signals the Federal Reserve's desire for additional credit expansion.

Which of the following serves as the central banker for private banks in the United States?

The 12 Federal Reserve Banks

The Federal Reserve holds deposits from

banks

Monetary policy is set by the

board of governors

If the Fed wishes to reduce the money supply, it can do all of the following except

buy shares of common stock in large bank

Suppose Brian receives a check for $100 from a bank in Atlanta. He deposits the check in his account at a Dallas bank. The Dallas bank will most likely collect the $100 directly from the

dallas regional federal reserve bank

If the Fed wishes to increase the money supply it can

decrease the discount rate

The rate of interest charged by Federal Reserve banks for lending reserves to member banks is the

discount rate

If the Fed wishes to increase the money supply, it could

lower the discount rate

Members of the Federal Reserve Board of Governors are appointed for one fourteen-year term so that they

make their decisions based on economic, rather than political, considerations

The use of money and credit controls to achieve macroeconomic goals is

monetary policy

The federal funds rate is the interest rate charged when

one bank lends reserves to another bank

The purchase and sale of government bonds by the Fed for the purpose of altering bank reserves is known as

open market operations

Which of the following is the principal mechanism used by the Federal Reserve to directly alter the reserves of the banking system?

open market operations

Which of the following is the tool used most frequently by the Fed?

open market operations

Which of the following is not true for members of the Federal Reserve Board of Governors?

they usually serve two or three terms


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