Exam 14: The Federal Reserve System

Table 14.2 Monetary Aggregates of the U.S.Financial System Item Amount Cash held by public \1 00billion Transactions deposits \3 00billion Required reserves \3 0billion Excess reserves \0 billion U.S. bonds held by public \ 475 billion Assume an original balance sheet: The total money supply (M1)in Table 14.2 is

Table 14.1 Monetary Aggregates of the U.S.Financial System Item Amount Cash held by public \2 50billion Transactions deposits \1 ,000billion Required reserves \1 50billion Excess reserves \0 billion U.S. bonds held by public \ 1,000 billion Assume an original balance sheet: On the basis of the information in Table 14.1,the required reserve ratio is

Is the Federal Reserve insulated from political pressures in any way? Explain.

Suppose Brian receives a check for $100 from a bank in Atlanta.He deposits the check in his account at a Dallas bank.The Dallas bank will most likely collect the $100 directly from the

By raising the required reserve ratio,the Fed

Anil buys a bond in the amount of $2,000 with a promised interest rate of 17 percent.If the market interest rate increases to 27 percent,Anil can sell his bond for up to

Through open market operations,the Fed is able to influence

Table 14.1 Monetary Aggregates of the U.S.Financial System Item Amount Cash held by public \2 50billion Transactions deposits \1 ,000billion Required reserves \1 50billion Excess reserves \0 billion U.S. bonds held by public \ 1,000 billion Assume an original balance sheet: Refer to Table 14.1.If the Fed buys $10 billion in bonds from the public,all of the following are true except

The M2 money supply is defined as

Suppose all of the banks in the Federal Reserve System have $500 billion in transactions accounts,the required reserve ratio is 0.30,and there are no excess reserves in the system.If the required reserve ratio is changed to 0.25,the total lending capacity of the system is increased by

When the Fed buys bonds,the money supply increases.

The Federal Reserve System was created by

If the Fed wishes to increase the money supply,it could

Table 14.2 Monetary Aggregates of the U.S.Financial System Item Amount Cash held by public \1 00billion Transactions deposits \3 00billion Required reserves \3 0billion Excess reserves \0 billion U.S. bonds held by public \ 475 billion Assume an original balance sheet: The level of total reserves in Table 14.2 is

All of the following are tools available to the Fed for controlling the money supply except

How can the Fed make bonds more attractive as an alternative to holding money,and what is the impact to the money supply?

Which of the following represents the lending capacity of an entire banking system?

The Fed can increase the federal funds rate by

Which of the following is not true for members of the Federal Reserve Board of Governors?

Which of the following is responsible for buying and selling government securities to influence reserves in the banking system?