Exam 13: Factor Markets: With Emphasis on the Labor Market

Suppose that the current federal funds rate is below the federal funds target rate.In order to raise the federal funds rate the Fed will ________________ securities on the open market which will ________________ the supply of reserves in the market for reserves,pushing the rate closer to the target rate.

The demand for reserves curve in the federal funds market is

The Fed can change the federal funds rate by issuing an order,but it cannot change the discount rate this way.

When the Fed sells government securities to a bank,the

In its current execution of monetary policy,the Fed does not usually have a specific _____________ target,but rather it tries to target a specific ________________.

If reserves increase by $29 million and the required reserve ratio is 11%,what is the resulting change in checkable deposits (or the money supply),assuming that there are no cash leakages and that banks hold zero excess reserves?

If reserves increase by $12 billion,what is the difference in the resulting change in checkable deposits when the required reserve ratio is 10 percent compared to when it is 8 percent?

The Fed is one of the largest departments within the U.S.Treasury.

The word that best describes the relationship between the required reserve ratio and the money supply is

Here is how an open market sale works: A commercial bank __________ government securities to (from)the Fed,which lowers the bank's deposits at the __________ and __________ the bank's __________.

Which of the following Fed actions will increase the money supply?

Refer to Exhibit 13-1.Suppose that the Federal Reserve conducts open market operations by purchasing $1,000 worth of government securities from Bank A.At the end of this process of money creation,what is the total amount of new checkable deposits?

The Federal Reserve System

Explain the difference between the discount rate and the federal funds rate.If the Fed wants to lower one of these rates,which one can the Fed change by issuing an order? Describe in detail how the Fed helps to lower the other rate.

Raising the required reserve ratio __________ the simple deposit multiplier which will __________ the economy's money supply.

Under free banking,banks are regulated by the Federal Reserve.

Assuming no cash leakages and no excess reserves held by banks,a required reserve ratio of 0 percent would mean that the simple deposit multiplier is

The president of the ________________________ holds a permanent seat on the FOMC.

The federal funds rate and the quantity demanded of reserves have a(n)____________ relationship.This is because as the federal funds rate moves down,it becomes _______________ for banks to hold reserves,encouraging banks to hold ____________ in reserves to guard against checkable deposit withdrawals.

The Board of Governors of the Federal Reserve is comprised of