Exam 15: The Federal Reserve System and Open Market Operations

The government's bank and the bankers' bank in the United States are called the:

The amount by which the money supply expands with each additional dollar in reserves is the:

The Federal Reserve acquires its exclusive powers through its ability to:

If the Fed wishes to lower interest rates, it should:

The Federal Reserve is the:

The Federal Reserve acquires its unique powers through its ability to:

Moral hazard occurs when:

If the total liabilities of Bank A are less than its total assets but its short-term liabilities are greater than its short-term assets, Bank A is:

Open market purchases stimulate the economy through both an increased money supply and lower interest rates.

When banks borrow directly from the Fed, the interest rate on those loans is the:

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

A liquid asset is:

The Federal Reserve acquires its unique power through its ability to issue money.

Which serves as a means of payment in the United States?

A bank will become illiquid if:

When the Fed lowers the Federal Funds rate:

Figure: AD and Monetary Policy Refer to the figure. Suppose a given economy starts at point A in the figure. If the Fed engages in an expansionary monetary policy, what would you expect to happen in the short run?

If the money multiplier is large, then action taken at the bottom of the money pyramid will have a relatively large effect on the entire pyramid.

Commercial banks make profits primarily through:

A liquid bank has short-term liabilities that are greater than its short-term assets but overall has assets that are greater than its liabilities.