Exam 13: The Federal Reserve System

If reserves increase by $8 billion, what is the difference in the resulting change in checkable deposits when the required reserve ratio is 12.5 percent compared to when it is 10 percent?

If banks are currently holding zero excess reserves and the Fed raises the required reserve ratio, which of the following will happen?

The Board of Governors of the Federal Reserve serves on a larger policy-making group called the House Banking Committee.

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

When a commercial bank borrows from the Fed,

If the Fed lowers the discount rate at the same time it conducts an open market sale, it follows that

If Bank A borrows from Bank B, reserves in the banking system __________. If Bank A borrows from the Fed, reserves in the banking system __________.

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

Open Market Operations are conducted by

When commercial banks need more Federal Reserve Notes,

When we speak of the Fed's responsibility to supervise member banks, we are saying that the

The president of the Federal Reserve District Bank of New York holds a permanent seat on the Federal Open Market Committee.

Suppose that the current federal funds rate is above the federal funds target rate. In order to lower the federal funds rate the Fed will ________________ securities on the open market which will ________________ the supply of reserves in the market for reserves, pushing the rate closer to the target rate.

The simple deposit multiplier is

Under free banking, banks are regulated by the Federal Reserve.

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

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 __________.

When the Fed sells government securities to a bank, the

If the Fed lowers the required reserve ratio, __________ in the banking system will remain unchanged but __________ will rise. This will (likely) lead to an increase in new loans and checkable deposits and a(n) __________ in the money supply.

To decrease the money supply, the Fed may sell government securities or lower taxes.