Eco. Unit 2 Quiz 2

How many federal reserve banks exist nationwide?

12

A ____________ and the Federal Open Market Committee oversee the operation of the Fed.

Board of Governors

In 1914, the Clayton Antitrust Act prevented a merging of corporations to have intertwined ________

Board of directors

1914 legislation that dealt against monopolies, particularly in the area of price-fixing

Clayton Antitrust Act

a governmental regulation; a mandate which is instituted to safeguard the purchaser

Consumer protection law

The ___ works to keep the balance of financial strength at a good level by keeping interest rates low in recessions and letting them rise in economic "boom" times.

Fed

a government investment in businesses, guaranteeing repayment

Government Securities

When banks borrow money from a Federal Reserve Bank, they are given a certain interest rate to pay back the loan. If the Federal Reserve System raises the rate of interest, the banks will find it:

Harder to make loans

the combining of two or more corporations or businesses

Merger

purchase or sale of government securities, increasing or decreasing amount of money banks lend

Open Market Operations

amount of money the Fed needs to have as a balance in possession

Reserve requirements

Five dangers of a monopoly?

The risk of higher prices, fewer well made products, inferior service, preventing other companies from entering the market place, and inconsistency in the market.

agreed-upon unofficial mergers formed to control prices and production in the marketplace

Trust

The ________ keeps a checking account with the Federal Reserve.

U.S. Treasury

a principle or value

ethic

Federal reserve-set interest rate to determine the amount needed to pay back the loan

Discount Rate

the dividing, sale, or liquidation of a corporation

Divestiture

Week by week the finances in this country can change, so the selling and buying of _______ helps to maintain equilibrium.

Securities

In a(n) _______ , one company, or even a small group of cooperating companies has control of the supply of a product or service.

monopoly

In which three ways does the Fed manage the country's money supply?

open-market operations (purchase or sale of government securities) change the discount rate change reserve requirements

After the trusts had eliminated the competition, they would cut back on production and _________.

raise prices