Exam 15: The Federal Reserve System

The Federal Reserve is one of the least independent agencies in the U.S.government.

As the growth rate of the money supply increases,the aggregate demand will increase along with interest rates in the short run.

The monetary base consists of currency:

Which asset is the LEAST liquid?

Why are banks reluctant to borrow at the discount window?

The possibility that the failure of one bank affects the performance of other banks is called:

Which rate does the Fed actually set?

The Federal Reserve has direct control over:

The required reserve ratio is determined by how:

Which asset would you classify as being most liquid?

Suppose the economy is growing faster than its long-run potential growth rate.To bring the real growth rate back to the long-run potential rate,the Fed should:

When the Fed buys short-term Treasury securities,short-term interest rates:

The Federal Reserve has the power to create money.

The Fed recapitalizes banks:

When banks take on too much risk with the hope that the Fed will eventually bail them out,a condition of _____ exists.

If you use a credit card for a payment,you have made a money transaction.

As a result of an increase in the growth rate of the money supply:

M1 and M2 are the largest components of the money pyramid.

If the Fed wants to increase the money supply,it will _____ Treasury securities.

If the reserve ratio is one-tenth,then a $1,000 injection of reserves will increase the money supply by $100.