Exam 15: The Federal Reserve System

When banks borrow from the Fed:

Do you think banks set a higher reserve ratio on checking accounts or savings accounts? Explain.

When the Fed set up its Term Auction Facility in 2007-2008,its goal was to:

Which is NOT a duty performed by the Federal Reserve System?

The narrowest measure of the U.S.money supply is:

What are the three tools the Fed can use to change the money supply in the economy? Briefly explain how they can affect the money supply.

The Federal Funds rate is the interest rate charged on a(n):

If the Fed sells $200 million in government bonds,the total money supply will:

A money market mutual fund invests in:

When the Federal Reserve conducts monetary policy,the Federal Reserve usually focuses on:

An increase in the growth rate of the money supply raises both real growth and inflation in the long run.

Which asset is the LEAST liquid?

Table: Money Supply Components Reserves held by banks at the Fed $120 billion Currency $800 billion Checkable deposits $650 billion Savings deposits $375 billion Small-time deposits $957 billion Money market mutual funds $486 billion Refer to the table.According to the data in the table,the total amount of M1 equals:

If the Fed wishes to implement a policy to influence aggregate demand,what are some of the important variables that it monitors and predicts in order to fine-tune its actions?

Which is TRUE of the structure of the Fed?

When a person withdraws money from a savings account,M2 decreases but M1 increases.

If the Fed decides to increase the money supply by $200 million,it can accomplish this by buying fewer than $200 million worth of government bonds in the open market.

The Federal Reserve is controlled by the Bilderberger Group and the Trilateral Commission to avoid influence from the political system.

Credit cards are included only in the M2 definition of the money supply.

The more liquid an asset,the more it can serve as money.