Fin 350 chp 2 & 3

Total Reserves $80,000,000; Reserve Requirement 5%; Total Deposits $700,000,000. Using the data above, the level of excess reserves is

$ 45,000,000

Number of Federal Reserve Governors (7) plus size of FOMC (12) less number of Federal Reserve banks (12) equals:

7

There are ______ members of the Federal Reserve Board of Governors, _______ members of the Federal Open Market Committee, and ________ Federal Reserve Banks.

7;12;12

To increase the money supply immediately but just slightly, the Fed would most likely

Buy securities on the open market

Who among the following does not have a permanent vote on the FOMC?

Chairman, Board of Governors

The Treasury draws most of its checks upon

Federal Reserve banks.

The asset of Federal Reserve banks associated with open market operations is

U.S. government securities.

All of the following are locations of Federal Reserve Banks except

Washington, DC

The Federal Reserve System established

a source of liquidity for the banking system.

Reforms and regulatory changes in U.S. financial institutions are best associated with:

periods of severe economic and financial problems in the U.S. economy.

The Discount Window

relates to the Fed's "lender of last resort" function

Which of the following was not a responsibility of the early Federal Reserve System?

replace the National Banking system

Federal Reserve float

represents a net extension of credit by the Fed, which increases bank reserves.

Consumption spending should increase if

reserve requirements decrease.

Deposits tend to expand whenever:

reserve requirements decrease.

The primary responsibility of the Federal Open Market Committee (FOMC) is to

set monetary policy

Influence of monetary policy on the real sector is

significant

Federal Reserve notes held in bank vaults are the liability or obligation of

the Fed

Ordinarily the money supply will decrease if:

the Fed makes fewer loans at its discount window, the Fed sells securities on the open market, and the Fed raises reserve requirements.

The monetary base will decrease when:

the Fed sells securities on the open market.

The velocity of money measures:

the relationship between the money supply and economic activity.

Which of the following was a responsibility of the early Federal Reserve System?

to control the money supply, to safeguard the national payment system, and to establish a more rigorous bank supervisory system

The intended longer run impact of monetary policy is

to influence change consumption and investment spending.

Velocity of money

varies inversely with the money supply, varies directly with GDP, and is not under the Fed's exclusive control

Unemployment should fall if

wages increase and people expect prices to be stable.

Changes in spending caused by changing security values are called the

wealth effect

An expansion in the U.S. money supply

will cause U.S. exports to increase.

Monetary policy impacts the economy

by affecting real spending directly, by affecting real spending through the financial sector, and by changing interest rates and the cost of housing.

Which of the following can be associated with the modern objectives of the Fed?

coordinate an efficient payments mechanism, provide an elastic money supply, and regulate the financial system.

Which of the following can be associated with original objectives of the Fed?

coordinate an efficient payments mechanism, provide an elastic money supply, and serve as lender of last resort.

M3 includes

currency in circulation and demand deposits

Monetary policies directed toward increased economic growth may have what impact upon the value of the dollar in relation to other currencies?

decrease

A decrease in the monetary base is related to

decrease in credit availability, increasing interest rates, and decreased investment.

Which of the following would most likely decrease the Federal Funds rate?

decrease in reserve requirements.

When the New York Fed sells Treasury securities to a securities dealer

depository institutions deposits in the Fed decrease and the deposit balance of the security dealer in its bank decreases.

An increase in excess reserves will cause

depository institutions to lend more freely.

Sustained open market buying by the Fed will cause

depository institutions to lend more freely.

The Fed's most visible monetary tool is probably

discount rate policy

The Fed's most important duty is to

establish the nation's monetary policy

A decrease in reserve requirements will definitely cause

excess reserves to increase.

Monetary policy probably affects all of the following except

federal government budget outlays.

For what purposes do depository institutions keep deposits in the Federal Reserve banks?

for clearing checks and to satisfy reserve requirements

An contraction in the U.S. money supply should

increase domestic interest rates, cause the exchange value of the dollar to increase, and cause U.S. exports to decrease.

The purchase of government securities by the Fed will

increase security prices.

Increases in the Fed's assets

increase the monetary base

An increase in Federal Reserve float

increases bank reserve deposits in the Fed.

An increase in the assets of Federal Reserve banks

increases the monetary base.

Influence of monetary policy on the financial sector is

inevitable

If the money supply increases too rapidly

inflationary expectations will rise.

Generally, plant and equipment investment spending will decrease if

interest rates rise while inflation remains unchanged, inflation decreases while interest rates remain unchanged, and reserve requirements rise.

The money supply

is not exclusively controlled by the Fed, is not smaller than the monetary base, and does not excludes any interest-bearing deposits

Monetarists and Keynesians agree that

monetary policy influences the real sector

Restrictive monetary policy first impacts the______ market,____ security prices and _____ interest rates.

money, decreasing, increasing

Which of the following tools of monetary policy has the greatest impact?

open market operations

The 12 Federal Reserve Banks are

Important components of the Fed, but no longer very autonomous

The Fed's non-monetary or regulatory powers do not include

Investigation and prosecution of counterfeiting

Which Fed action does not directly increase total reserves in the banking system?

Lowering the Discount Rate

Reserve requirements apply to

National banks, State banks, and Savings-and-loan associations

Which of the following is not a channel of transmission of monetary policy?

Reg Q interest rate ceilings

Which of the following is in the correct historical order?

Second Bank of the United States, National Banking Acts, Federal Reserve Act

Total Reserves $80,000,000; Reserve Requirement 5%; Total Deposits $700,000,000. The data above exemplify

an arguable underutilization of resources, at least for the moment, an excess reserve position, and a near-term likelihood that loans and deposits will expand

Total Reserves $80,000,000; Reserve Requirement 5%; Total Deposits $700,000,000. The data above could exemplify a direct, immediate effect of any of the following except

an open market sale by the Fed

Monetarists believe that an increase in the money supply, all else equal, will cause:

consumption expenditures to rise.

The Fed's primary tools of monetary policy include all the following except

changes in the Federal Funds rate-

The "tools" of monetary policy, whether "viable" or not, include all the following except

changes in the Federal Funds rate.