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