The Monetary System
The Fed conducts monetary policy primarily through:
open market operations
The largest liability on commercial banks' balance sheets is
Deposits
When banks have __________ reserves they can create money by making new loans.
Excess
Money that has value due to government decree is known as __________ money.
Fiat
The largest asset on commercial banks' balance sheets is
Loans
The sum of all currency held by individuals and businesses, traveler's checks, and checkable deposits owned by individuals and businesses is equal to
M1
The actions the Federal Reserve takes to manage the money supply and interest rates in order to pursue economic objectives are called
Monetary policy
The Board of Governors of the Federal Reserve has _________ members that are appointed for staggered _________ by the __________ and confirmed by the Senate.
Seven, 14-year terms, President
A money multiplier equal to 5 means that:
a dollar change in the monetary base leads to a five dollar change in the quantity of money.
Electronic cash, or e-cash, is an electronic currency but it is not money because
it is not universally accepted as payment
Any token that is generally accepted as a means of payment is known as
Money
Credit cards are
Not part of the money supply
Who is the chairperson of the Federal Open Market Committee (FOMC)?
The chairperson of the Board of Governors.
The financial crisis of 2008 led the Fed to engage in large scale open market bond purchases known as
quantitative easing
The name given to the fraction of deposits that a bank is legally required to hold in its vault, or as deposits at the Fed, is
required reserves
The Federal Reserve System is
the central bank of the United States
If the Federal Reserve wanted to decrease the quantity of money it could
sell bonds on the open market
How many Federal Reserve districts are there?
12
GDP=
Consumer Spending+Investments+Government Spending+New Exports
Which of these is a financial institution that accepts deposits considered to be part of the nation's money supply?
Money market fund
When we say that money serves as a unit of account, we mean that:
Prices are quoted in terms of money.
Which body of the Federal Reserve System sets U.S. monetary policy?
The Federal Open Market Committee
To increase the quantity of money, the Fed
buys U.S. Treasury securities
The interest rate charged on very short-term interbank loans is called the
federal funds rate