Chapter 11- Federal Reserve System

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7 Board of Governors members, President of Federal Reserve Bank of New York, and 4 other Federal Reserve District Bank President

What members make up the Federal Open Market Committee?

Federal Funds Rate

a rate at which banks borrow from other banks (most important)

14 year term

how long does the president appoint the member of the board of governors?

1 main bank

how many banks does each district have?

12

how many federal reserve districts are there?

12 members

how many members are on the Federal Open Market Committee?

7

how many members are on the board of governors?

Discount Rate

the rate at which the bank can borrow from the FED

to coordinate and control the activities of the FED

what are the responsibilities of the board of governors?

the president

who appoints the members of the board of Governors?

open market purchases of securities, open market sales of securities

Open Market Operations

Open Market Operations, The Required Reserve Ratio, The Discount Rate

What are the FED's tools for controlling the Money Supply?

Supply the economy with paper money, Control the money Supply, Provide check- clearing services, Hold depository institutions' reserves, Supervise member banks, Serve as the governments banker, Serve as a lender of last resort

What are the functions of the FED?

Prime Rate

interest rare that banks charge their best customers (risk free rate)

Nominal and Real Interest Rates

nominal interest rate is real interest rate + expected inflation rate


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