Exam 15: The Federal Reserve System and Open Market Operations

The Fed will be most effective at changing the money supply when:

The money multiplier is greater than one because banks:

The interest rate the Federal Reserve charges on loans it makes to commercial banks is called the:

The reserve ratio is the ratio of bank reserves to:

The Federal Reserve lends money to other banks.

Open market operations occur when:

Systemic risk is present when:

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

M2 is included in M1.

The interest rate that the Fed has the most control over is the:

The world's largest bank customer is:

A higher bank reserve ratio results in an increase in the money supply.

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

Reserves held at the Fed are:

What will happen when banks decide to increase their reserve ratios?

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

When the Federal Reserve buys bonds, the demand curve for bonds:

If the reserve ratio is 10%, then a $100 increase in bank deposits can potentially lead to:

The interest rate commercial banks charge each other on overnight loans is called the:

The monetary base (MB) refers to: