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Terms in this set (34)
In the federal funds market diagram, an open market sale by the Fed
shifts the reserve supply curve to the left
The chair of the federal reserve is
Chosen by the president
The monetary base consists of
currency in circulation and reserves
If the Fed desired to reduce the federal funds rate
it would conduct an open market purchase, increasing reserve supply
The Federal Open Market Committee consists of
seven members of the Board of Governors and five presidents of the regional Fed banks.
The monetary base minus currency in circulation equals
Each Fed bank president attends FOMC meetings; although only ________ Fed bank presidents vote on policy, all ________ provide input.
five to twelve
An important function of the regional federal reserve banks is
High powered money minus currency in circulation equals
When the Fed extends a $100 discount loan to the First National Bank, reserves in the banking system
increase by $100
Individuals that lend funds to bank by opening a checking account are called
matched sale-purchase transaction is also know as a
The Fed can implement open market operations
more rapidly than either changes in the discount rate or changes in reserve requirements.
Which of the following is NOT an entity of the federal reserve system
The Comptroller of the Currency
Which of the following functions is not performed by any of the twelve regional federal reserve banks
Setting interest rates payable on time deposits
All of the following statements about secondary credit are true EXCEPT
they are temporary, short-term loans to satisfy seasonal requirements.
Which of the following statements about central bank structure and independence is TRUE
Both theory and experience suggest that more independent central banks produce better monetary policy
The nine directors of the Federal Reserve Banks are split into three categories: ________ are professional bankers, ________ are leaders from industry, and ________ are to represent the public interest and are not allowed to be officers, employees, or stockholders of banks.
The Fed's support of the Depository Institutions Deregulation & Monetary Control Act of 1980 stemmed in part from its
Concern over declining Fed membership
Temporary, short-term discount loans to banks in areas in which agriculture and tourism are important are known as
The chairman of the board of governors is chosen from among the seven governors and serves a ___, renewable term
The amount of deposits that banks must hold in reserve is
Which of the following is NOT a current duty of the Board of Governors of the Federal Reserve System
Setting the maximum interest rates payable on certain types of time deposits under regulation Q
Total reserves are the sum of ________ and ________.
excess reserves; required reserves
During and after the financial crisis of 2007-2009, the Fed greatly increased the supply of reserves through three rounds of quantitative easing by
purchases of both long-term Treasury securities and mortgage-backed securities.
Prior to 1980, member banks left the Federal Reserve System due to
the high cost of required reserves.
The first bank of the United States
was disbanded in 1811 when its charter was not renewed.
When the Fed sells $100 worth of bonds to a primary dealer, reserves in the banking system
decrease by $100
Members of Congress are able to influence monetary policy, albeit indirectly, through their ability to
propose legislation that would force the Fed to submit budget requests to Congress, as must other government agencies.
Depository Institutions Deregulation and Monetary Control Act of 1980
established uniform reserve requirements for all banks.
Reserves are equal to the sum of
required reserves and excess reserves
The three players in the money supply process include
banks, depositors, and the central bank
Each governor on the Board of Governors can serve
one full nonrenewable fourteen-year term plus part of another term.
Under which circumstances is the Fed most likely to carry out a defensive open market operation?
If a snowstorm results in a delay in check clearing, resulting in an increase in the Federal Reserve float
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