Exam 13: The Federal Reserve System

Exhibit 13-1 -Refer to Exhibit 13-1. Suppose that the Federal Reserve conducts open market operations by purchasing $1,000 worth of government securities from Bank A. As a result,Bank A finds itself with $1,000 in excess reserves that it lends out and those funds end up in Bank B. What dollar value goes in blanks (A)and (B),respectively?.

When one commercial bank borrows from another commercial bank,it pays the __________ rate.

The word that best describes the relationship between the required reserve ratio and the money supply is

Summarize the history of how the Federal Reserve came to have twelve districts.

When commercial banks borrow from other commercial banks,the immediate impact is that reserves in the banking system

Assuming no cash leakages and no excess reserves held by banks,a required reserve ratio of 0 percent would mean that the simple deposit multiplier is

When the Federal Open Market Committee (FOMC)votes on policy,it does so in the following order: the chair votes first,the vice chair votes second,and the remaining FOMC members vote based on their seniority at the Fed.

An open market __________ by the Fed increases the money supply; a(n)__________ in the required reserve ratio increases the money supply.

The Fed

Lowering the required reserve ratio raises the simple deposit multiplier.

The interest rate that the Fed charges when it lends reserves to banks is called the federal funds rate.

When a bank repays a _________________ loan,the Fed _____________________ the bank's reserve account.

An open market purchase by the Fed

The Federal Reserve System began operations in

Which of the following will decrease the money supply?

Which of the following statements is false?

If the Fed ______________________,the money supply will ultimately __________.

If the Fed raises the discount rate at the same time it conducts an open market sale,it follows that the money supply will

The Banking Act of 1935 changed the name of the _______________ to the Board of Governors of the Federal Reserve System.

Open market operations are the