CHAPTER 15- ECON. yes
the number of district federal reserve banks in the united states is
12
12 member committee in the federal reserve system that decides how the fed should control the nations money supply
FEDERAL OPEN MARKETT COMMITTEE
Monetary policy involved changing the rate of growth of the money supply in order to affect the cost of credit T OR F
T
the fed buys and sells govt securities in order to control the rate of growth of the money supply T OR F
T
the three main tools that the Fed uses are changing reserve requirements, changing interest rates, and buying and selling government sequrities T or F
T
which of the following is a result of tight money policy
businesses cut back on production
if a bank increases its reserves it can
charge higher interest rates for loans
method by which a check that has been deposited in one institution is transferred to the issuers depository institutution
check clearing
the federal reserve can affect the money supply by
chnaging reserve requirements
interest rate the fed charges on loans to member banks
discount rate
a hgih prime rate
discourages borrowing
Federal Reserve System
fed
interest rate banks charge each other on loans usually overnight loans
federal funds rate
one problem in carrying out monetary policy is the
feds receiving conflicting advice from many directions
system in which only a portion of the deposits in a bank is kept of reserve
fractional reserve banking
which of the following might result if the fed increases the discount rate
increase in the prime rate
to decrease the money supply, the fed can
increase the reserve requirement
which of the following is affected by decisions of the federal open market committee?
interest rates
___ money policy makes credit inexpensive and easier to obtain, possibly leading to inflation
loose
when credit is inexpensive and easy to get, the fed is probably using a
loose money policy
___ policy involved changing the rate of growth of the money supply in order to affect the cost of credit
monetary
policy that involves changing the rate of growth of the supply of money in circulation in order to affect the cost and availability of credit
monetary policy
the federal reserve is responsible for
monetary policy in the US
no matter what tool of monetary policy the fed uses, the goal is to manipulate the supply of ___ in circulation
money
if the fed lowers the reserve requirement,
more money is available to loan
buying and selling government securities, a practice called ___ __ __ is the major tool the fed uses to control the money supply
open market operations
buying and selling of US securities by the Fed to affect the money supply
open market operations
the main tool the fed uses to affect interest rates is
open market operations
which of the following is a result of loose money policy
people are willing to borrow money
rate of interzstthat banks charge on loans to their best business customers
prime rate
the primary responsibility of the Fed is to
regulate the money supoky
regulations set by the Fed requiring banks to keep a certain percentage of their deposits as cash in their own vaults or as deposits in their district federal reserve banks
reserve requirements
The Federal Open Market Committee is responsible for raising or lowering interest rates, which has a profound effect of the global economy. T OR F
t
the ability of banks to allow more than one individual to spend the same money is called
the multiple expansion of the money supply
___money policy makes credit expensive and more difficult to obtain in an effort to slow the economy
tight
monetary policy that makes credit expensive and in short supply in order to slow the economy
tight money policy
why would a country want a tight monetary policy
to control inflation
fractional reserve banking makes it possible for banks to
use some deposits to make loans
