Exam 12: Money Creation and the Federal Reserve

The Fed has been successful at keeping the federal funds rate near the target.

The Federal Reserve's Board of Governors is based in which city?

Which action is NOT a tool of monetary policy?

How does quantitative easing differ from regular open market operations?

If foreigners become less confident in the ability of the U.S. dollar to hold its value, the _____ multiplier will _____.

Sumit deposits $1,500 cash into his checking account, which the bank holds in its vault. The reserve requirement is 25%. What is the change in his bank's required reserves?

In June 2013, the Bank of Japan announced that it was continuing its easy money policy through open market operations. This bank must have decided to continue to sell securities.

If foreign countries abandoned the use of the dollar as their only form of legal currency, the U.S. money multiplier would likely increase.

Which statement is NOT true?

The two types of reserves are federal reserves and required reserves.

Assume that the reserve requirement is 10% and no excess reserves are held. If an initial cash deposit of $10,000 is made, the money supply has the potential to increase by

If there is a general rise in fear of the financial system, then the actual money multiplier is likely to fall.

The Federal Reserve System resulted from a compromise between those who wanted a strong central bank and those who wanted no central bank.

If a bank does not have enough funds in its reserves, it can borrow through either the federal funds market or the discount window.

How did the Fed encourage more borrowing by banks during the banking crisis of 2007?

The 2007 housing crisis led banks to increase lending in an effort to offset foreclosures.

Which statement lists contractionary policies?

A bank has $50,000 in checking account deposits and loans of $49,000. Of the $49,000 loaned out, $43,000 remains in the checking accounts of the loan recipients. The bank has $50,000 cash on hand, and the reserve requirement is 25%. The amount of its excess reserves equals

The central bank of the United States is

The discount window gives banks a buffer in the reserves market against unexpected day-to-day fluctuations in the demand and supply of reserves.