Exam 13: The Federal Reserve System

If reserves increase by $4 million and the required reserve ratio is 8%,what is the resulting change in checkable deposits (or the money supply),assuming that there are no cash leakages and that banks hold zero excess reserves?

Which of the following is not a monetary policy tool of the Fed?

To limit political influence on Fed policy,the terms of the Fed Board of Governors are staggered so that one new appointment is made every four years to coincide with the presidential elections.

Which of the following Fed actions will decrease the money supply?

Paper money is printed at the _______________________,but it is issued to commercial banks by the ______________________________.

The Fed can change the money supply by changing

If a bank has zero excess reserves and one of its creditworthy customers applies for a loan,the bank may be able to grant the loan if it can

A decrease in the required reserve ratio __________ the money supply; an open market purchase __________ the money supply.

The lower the required reserve ratio,

The smaller the required reserve ratio,the larger the simple deposit multiplier.

An "open market operation" is said to occur when the Fed

If the Fed were to increase the discount rate so that it was much higher than the federal funds rate,eventually

Here is how an open market sale works: A commercial bank __________ government securities to (from)the Fed,which lowers the bank's deposits at the __________ and __________ the bank's __________.

Controlling the nation's money supply is the most important duty of the Federal Reserve.

Suppose that the Fed undertakes an open market sale,selling $1 million worth of securities to a bank. If the required reserve ratio is 8%,checkable deposits (or the money supply),would _______________ by ________________ million,assuming that there are no cash leakages and that banks hold zero excess reserves.

The Federal Open Market Committee (FOMC)

The Fed has been called "the lender of last resort" because it

Which of the following actions is most likely to lead to an increase in the money supply?

The Federal Open Market Committee (FOMC)meets on the first Tuesday of each month.

An open market sale by the Fed will