Exam 15: The Federal Reserve System and Open Market Operations

When banks take on too much risk with the hope that the Fed will eventually bail them out, a condition of _____ exists.

Which asset would you classify as being most liquid?

The Fed sets up the Term Auction Facility when it wants to:

Which definition of money has the greatest value in the money pyramid?

Which is NOT a means of payment?

M1 is equal to currency plus:

The Federal Reserve typically affects the real rate of interest in:

If the average reserve ratio in the banking system is 25% and the Fed increases bank reserves by $20,000, then the change in the money supply will be equal to $80,000.

Which is included in M2?

When the Federal Reserve makes an open market purchase, the amount of money available for the banking system to loan:

M1 refers to:

The money multiplier is greater than 1 because most banks keep more than 100% of any increase in bank deposits as reserves.

Tyler owes $100,000, but he owns Mexican Amati paintings that he could sell immediately for $80,000 or within a few months for $120,000. If these are all the assets and liabilities that Tyler has, Tyler is:

The Fed loaned money to J. P. Morgan and AIG because it was concerned about:

The possibility that the failure of one bank affects the performance of other banks is called:

As a result of an increase in the growth rate of the money supply:

Suppose the reserve ratio is 20% for all banks. If the Fed increases bank reserves by $200, then the money supply will:

Which tool can the Federal Reserve use to control the money supply?

Under fractional reserve banking, banks:

The discount rate is the: