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

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 equation would be used to determine the total amount of new checkable deposits?

The Board of Governors of the Federal Reserve serves on a larger policy-making group called the House Banking Committee.

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.As a result,Bank A finds itself with $1,000 in excess reserves that it lends out and those funds end up in Bank B.The loan made by Bank B ends up in Bank C,and the loan made by bank C ends up in Bank D.What dollar value goes in blanks (E)and (F),respectively?.

Which of the following is not a function of the Fed?

An "open market operation" is said to occur when the Fed

Here is how an open market purchase works: The Fed __________ government securities to (from)a commercial bank,which raises the bank's deposits at the __________ and increases the bank's __________.

Suppose the Fed sells a $50,000 U.S.Treasury security to Martha,a member of the public.If Martha writes a check to the Fed in order to buy this security,the money in her checking account will be transferred to

The discount rate is sometimes also known as the primary credit rate.

If reserves increase by $50 billion and the required reserve ratio is 8%,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?

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

The Fed has been called "the lender of last resort" because it

The Banking Act of 1935 changed the name of the _______________ to the Board of Governors of the Federal Reserve System.

The Fed can change the money supply by changing

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

The president of the Federal Reserve District Bank of New York holds a permanent seat on the Federal Open Market Committee.

Which of the following statements is false?

Refer to Exhibit 13-2.What word (up or down)should go in the place of blank (5)and blank (6),respectively?

If the federal funds rate falls below the discount rate,banks will decrease their borrowings from __________ and __________ their borrowings from __________.It follows that when one bank borrows from __________,reserves in the banking system __________.

If the Fed wants to increase the money supply,it can __________ the required reserve ratio,conduct an open market __________,or __________the discount rate.

The Federal Reserve System came into existence with the Federal Reserve Act of