Explanation: The Federal Reserve System is the central bank of the United States. By increasing the required reserves, the banking industry will have more excess reserves available for lending. The Federal Reserve is an independent entity established by the Federal Reserve Act of 1913. The interest rate private banks charge each other for lending reserves is called the federal funds rate. Selling bonds and increasing the discount rate. --Discount Rate--the interest rate charged by Federal Reserve Banks to depository institutions on short-term loans. By buying bonds, the Fed decreases the quantity of reserves in the banking system and decreases the money supply. D. measure of wealth. The Federal Reserve System performs five functions to promote the effective operation of the U.S. economy and, more generally, to serve the public interest. https://quizlet.com/173306549/the-federal-reserve-flashcards B. store of value. A. Members of the Federal Reserve Board of Governors are appointed for one fourteen-year term: The chairman can be reappointed for more than one term. Both banks issued currency, made commercial loans, accepted deposits, purchased securities, maintained multiple branches and acted as fiscal agents for the U.S. Treasury. Which of the following is true about the chairman of the Federal Reserve Board of Governors? The discount rate is the interest rate charged by: The rate of interest banks charge each other for lending reserves is the: Which of the following lends reserves to private banks? Given an upward-sloping aggregate supply curve, which of the following is most likely to occur if the Fed sells bonds in the open market, ceteris paribus? The chairman and vice-chairman are appointed to four-year terms and may be reappointed subject to term li… It is the only Federal Reserve bank that is a member of the Bank for International Settlements (BIS). B. B. set the discount rate. The board consists of the seven governors, appointed by the president and confirmed by the Senate. Monetary policy involves the use of federal government spending to change the money supply. To decrease the money supply the Fed can: When the Fed announces that it is raising the federal funds rate, this signals its intention to _______ bonds in the open market and _______ the money supply. For a given amount of total reserves, a decrease in required reserves causes an increase in excess reserves. When the Fed sells bonds, bank reserves increase. According to the aggregate supply drawn under the monetarist view, which of the following would lead to a higher price level? group of 12 Federal Reserve Bank presidents only. d. Managing the national money supply to meet current demand. The other five are presidents of the federal reserve district banks (there are 12 total). Used a mix of money-supply and interest-rate adjustments. c. Regulating the banking industry and providing banking services. The president of the United States. Ceteris paribus, if the Fed reduces the reserve requirement, then: Is the reciprocal of the required reserve ratio. The key decision maker for general Federal Reserve policy is the: The key decision maker for U.S. monetary policy is: Seven members appointed by the president of the United States. A bank's required reserves may be held in which two forms? a. If the Federal Reserve wanted to stimulate the economy, it would most likely: A. reduce the discount rate. The main responsibility of the chairman is to carry out the mandate of the Fed, which is to promote the goals of maximum employment, stable prices, and moderate long-term interest rates… According to the Keynesian view of aggregate supply, an increase in the money supply will: Perfectly vertical at the natural rate of unemployment. Ceteris paribus, if the Fed raises the discount rate, then: A. Using the aggregate supply drawn under the monetarist view, what should happen to the equilibrium price level and quantity of output if the Fed buys bonds? The Federal Reserve Act's policy is to consider the American economy above all official decisions. Which of the following is not a basic monetary policy tool used by the Fed? The Federal Reserve Act states that the Board of Governors What are the responsibilities of the Federal Reserve? The aggregate demand curve should shift rightward. The Federal Reserve System is the central bank of the United States and provides the nation with a safe, flexible, and stable monetary and financial system. The Board of Governors consists of seven members elected by the public every four years. Which of the following is the Fed trying to accomplish as a result of this action? If a bank does not have enough reserves, it can: Which of the following is not a possible source of last-minute reserves for a private bank? Board of Governors only. At that time, President Woodrow Wilson wanted a government-appointed central board. The Federal Reserve was created on December 23, 1913, when President Woodrow Wilson signed the Federal Reserve Act into law. If the Fed wishes to decrease the money supply it can: The policy lever most commonly used by the Fed is: A. When the Fed sells bonds, the quantity of reserves in the banking system declines and the money supply decreases. Equilibrium price level should increase and equilibrium output should stay constant. Lower average prices and more unemployment. C. control the monetary base. A particularly severe crisis in 1907 led Congress to enact the Federal Reserve Act in 1913. Is the number of deposit dollars the banking system can create from $1 of excess reserves. Suppose Alan receives a check for $300 from a bank in Dallas. The Federal Reserve banks clear checks between private banks, hold bank reserves, provide currency for banks, and make loans to private banks. Ceteris paribus, which of the following will occur if the Fed buys bonds through open-market operations? The use of money and credit controls to change macroeconomic activity is known as: Monetary policy involves the use of money and credit controls to: Federal Reserve System's control over the money supply. If the Fed buys more bonds from the public, then the money supply will: Reduce the reserve requirement, reduce the discount rate, or buy bonds. The Federal Reserve uses a variety of policy tools to foster its statutory objectives of maximum employment and price stability. tend to increase reserves in the system leading to reductions in interest rates. The interest received on that debt is given Assuming the economy is in the upward sloping portion of the eclectic aggregate supply curve, what should happen to the price level and output as a result of the Fed's action, ceteris paribus? All of the above are tools of monetary policy. Which of the following is not a monetary policy tool for shifting the aggregate demand curve? They are equal to the required reserve ratio times transactions deposits. The primary responsibilities of the Federal Reserve Board are the formulation and conduct of monetary policy and the supervision and regulation of banks. Which of the following will cause an increase in aggregate demand? A commercial bank is a private bank primarily concerned with maximizing its revenue by holding deposits and making loans and investments with a portion of those deposits. The press scrutinizes the Federal Reserve for clues on how the economy is performing and what the FOMC and Board of Governors plan to do about it. Determine the impact of monetary policy on price level and output. D. Only A and C are correct. Monetary policy refers to what the Federal Reserve, the nation's central bank, does to influence the amount of money and credit in the U.S. economy. The First Bank of the United States (1791–1811) and the Second Bank of the United States (1817–1836) each had a 20-year charter. The institution responsible for managing a nation's money supply is the __________. All of the following are responsibilities of the Federal Reserve EXCEPT to: A. oversee and regulate the banking system. Today, … It includes three key entities: the Board of Governors, 12 Federal Reserve … Which of the following approaches should the Fed use if it experiences large lags and mistakes in monetary policy? The Federal Reserve System Purposes & Functions 23 The Federal Reserve’s Monetary Policy Mandate and Why It Matters The Federal Reserve was created by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and finan-cial system. Fed purchases of bonds from the public, called open market operations: In 2008, the Fed _____ the discount rate in order to _____ the economy. E. Which of the following is not true about excess reserves? The Board of Governors in Washington, D.C., is an agency of the federal government and reports to and is directly accountable to the Congress. more Central Bank Definition Checks are cleared between private banks by: The 12 regional Fed banks do all of the following except: Make their decisions based on economic, rather than political, considerations. A decrease in the reserve requirement will cause a decrease in the money multiplier. Which of the following is responsible for holding bank reserves? The Federal Reserve System is responsible for all of the following EXCEPT. D. mint bills and coins. Serves a four-year term and can be reappointed. The Fed directly affects your stock and bond mutual funds and your loan rates. 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