Exam 15: The Federal Reserve System

A liquid asset is:

When the Fed conducts open market operations to decrease the monetary base,real GDP growth:

What was the rationale for the Fed lending billions of dollars to the insurance company American International Group (AIG)?

Which concept describes the ease with which an asset can be quickly converted into money without losing its value?

The Federal Reserve can influence the economy by shifting:

Demand deposits are:

When the Fed lowers the Federal Funds rate:

Which is NOT included in the U.S.money supplies M1 and M2?

Figure: Fed Policy If an economy is operating below its long-run potential growth rate as shown in the graph,what can the Fed do to bring the economy back toward its long-run growth rate? Explain.

The financial crisis of 2008 illustrates that:

Federal Deposit Insurance Corporation insures deposits for up to _____ for each depositor named on the account.

Under fractional reserve banking,banks hold:

The Fed's Term Auction Facility is designed to encourage borrowing by banks.

The most liquid asset is cash.

If instead of buying short-term Treasury securities the Fed decides to purchase the country's supply of paper clips,the money supply:

In the United States,the largest category of means of payment is:

Which is NOT a function of the Federal Reserve?

M2 refers to:

Which is NOT a reason so much U.S.currency circulates in other countries?

The federal government has considerable control over policy actions of the Federal Reserve because the U.S.president appoints all Federal Reserve Bank presidents.