Exam 4: Federal Reserve System

In response to the 2007 - 2009 financial crisis, the Fed's prime credit rate, which was 6.25 percent at the end of 2006, was lowered to _____ percent by the end of 2008 and was maintained at that level through 2009. Too specific

Under the authority of the Federal Reserve Act of 1913:

The Fed would be practicing contractionary monetary policy if, through open market operations, it is a net seller of government securities.

The Fed would be practicing contractionary monetary policy if it caused a decrease in market interest rates.

Federal Reserve actions that offset unexpected monetary developments and contribute to the smooth everyday functioning of the economy are called

The Consumer Credit Protection Act requires that lenders clearly explain consumer credit costs and prohibited them from charging overly high-priced credit transactions.

Fannie Mae was created to support the financial markets by purchasing home mortgages and automobile loans from banks so that the proceeds could be lent to other borrowers.

Currently, the Chairman of the Federal Reserve is ________________________.

Because depository institutions earn no interest on reserves:

Which monetary policy tool does the Fed use most infrequently?

All Federal Reserve Banks have:

A central bank does not:

The five components of the Federal Reserve System include:

A (n) ____________________ is necessary for the monetary system to carry out the financial function of transferring money, which in turn is a requirement for an effective financial system.

Open market operations are similar to discount operations in that they increase or decrease bank reserves at the initiative of the Fed.

The United States created its system of central banking:

The members of the board of directors of each Federal Reserve bank are:

Although not provided for in the original organization of the Fed, open market operations have become the most important and effective means of monetary control.

A major weakness of the banking system under the National Banking Acts was that the money supply could not be easily expanded or contracted to meet changing seasonal needs and/or changes in economic activity.

The National Banking Act provides that national banks can issue their own notes only against U.S.government bonds that the banks held on deposit with large city banks.