Chapter 14 Monetary Policy and Fed macroeconomics
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
