AP Econ Ch 15

The Federal Reserve Banks buy government securities from commercial banks. As a result, the checkable deposits:

of commercial banks are unchanged, but their reserves increase

The commercial banking system borrows from the Federal Reserve Banks. As a result, the checkable deposits:

of commercial banks are unchanged, but their reserves increase

Which of the following is a tool of monetary policy?

open market operations

Which of the following is an asset on the consolidated balance sheet of the Federal Reserve Banks?

loans to commercial banks

Commercial banks and thrifts usually hold only small amounts of excess reserves because:

the Fed does not pay interest on reserves.

The securities held as assets by the Federal Reserve Banks consist mainly of:

Treasury bills and Treasury bonds.

Federal Reserve Notes in circulation are

a liability as viewed by the Federal Reserve Banks

Reserves must be deposited in the Federal Reserve Banks by:

all depository institutions, that is, all commercial banks and thrift institutions

The Federal Reserve Banks sell government securities to the public. As a result, the checkable deposits

and reserves of commercial banks both decrease

When a commercial bank borrows from a Federal Reserve Bank

the commercial bank's lending ability is increased

Which of the following will increase commercial bank reserves?

the purchase of government bonds in the open market by the Federal Reserve Banks