Ceteris paribus, if the Fed raises the reserve requirement, then: The lending capacity of the banking system increases. D. measure of wealth. Providing banking and fiscal services to the federal government. d. seven members elected by Congress. When the Fed sells bonds, the quantity of reserves in the banking system declines and the money supply decreases. E. is the use of money and credit controls to influence macroeconomic activity. Cause inflation if the economy is at full employment. A vertical aggregate supply curve favors which of the following policies? Which of the following cannot be used to shift aggregate demand? b. Members of the Federal Reserve Board of Governors are appointed for one fourteen-year term so that they: In an effort to isolate the Fed from political pressures. The principal mechanism for directly changing the reserves of the banking system is: The purchase and sale of government bonds by the Fed for the purpose of altering bank reserves is referred to as: The buying and selling of government bonds to influence reserves in the banking system is the responsibility of the: When the Fed makes bonds more or less attractive, it influences the: If the Fed wants to increase bank reserves, it can: If the Fed wants to decrease the money supply, it can: Raise the discount rate or sell bonds on the open market. Ceteris paribus, if the reserve requirement is increased to 0.25, then excess reserves will: Suppose the banks in the Federal Reserve System have $1 billion in transactions accounts and the reserve requirement is 0.10. The group responsible for deciding on monetary policy is the Federal Open Market Committee. The Federal Reserve System is the central bank of the United States and provides the nation with a safe, flexible, and stable monetary and financial system. By buying bonds, the Fed decreases the quantity of reserves in the banking system and decreases the money supply. Makes critical decisions. C. The New York Federal Reserve district contains many of the largest commercial banks in the United States. Within the structure of the Federal Reserve System, each of the following is a depository institution EXCEPT. tend to increase reserves in the system leading to reductions in interest rates. Given Keynesian assumptions about the shape of the aggregate supply curve and an economy suffering a recession, which of the following is most likely to occur if the Fed pursues expansionary monetary policy? D. Only A and C are correct. A change in the reserve requirement is the tool used least often by the Fed because it: Bank reserves in excess of required reserves. Monetary policy refers to what the Federal Reserve, the nation's central bank, does to influence the amount of money and credit in the U.S. economy. For a given amount of total reserves, a decrease in required reserves causes an increase in excess reserves. a. Founded in December 1913, it is what balances if not drives the Federal Reserves System. The Federal Reserve banks clear checks between private banks, hold bank reserves, provide currency for banks, and make loans to private banks. If the Fed wishes to decrease the money supply it can: The policy lever most commonly used by the Fed is: A. Borrow reserves from the discount window. If the Fed wants to increase the money supply, it should increase the discount rate. Ceteris paribus, if the Fed raises the discount rate, then: A. Assuming the economy is in the upward sloping portion of the eclectic aggregate supply curve, what should happen to the price level and output as a result of the Fed's action, ceteris paribus? First horizontal, then upward sloping, and finally vertical. Implementing fiscal policy concerning taxation and government spending. Ceteris paribus, if the reserve requirement is decreased to 0.07, then excess reserves will increase by: The Federal Reserve is an independent entity established by the Federal Reserve Act of 1913. To increase the money supply the Fed can: The aggregate demand curve should shift leftward. Given an upward-sloping aggregate supply curve, attempts to reduce unemployment through monetary policy will aggravate current inflation as illustrated by a: The equilibrium price level and output will both decrease. A. is the rate of interest charged by the Fed when it lends money to private banks. The Fed has most likely reduced the: If a private bank lends money to another bank, the interest rate that is charged for the loan is the: How many members are there of the U.S. Senate Committee on Banking, Housing and Urban Affairs? The Federal Reserve, as America's central bank, is responsible for controlling the money supply of the U.S. dollar. The institution responsible for managing a nation's money supply is the __________. Which of the following is responsible for providing currency and cash to banks? Which of the following will cause an increase in aggregate demand? The money multiplier and excess reserves. Suppose the banks in the Federal Reserve System have $400 million in transactions accounts and the reserve requirement is 0.10. Which of the following policies is supported by the idea that producers and workers will demand higher prices and wages when they see the money supply expanding? Which of the following functions does the Fed perform? The 10th edition of The Federal Reserve System Purposes & Functions details the structure, responsibilities, and aims of the U.S. central banking system. 12 members, one from each Federal Reserve District. Which of the following is Alan's Baltimore bank likely to collect the $300 from? Question: Which Of The Following Are Responsibilities Of The Federal Reserve? How many members are on the Federal Reserve board of governors? One News Wire article in the text has the title "Fed Cuts Key Interest Rate Half-Point to 1 Percent." The Board of Governors of the Federal Reserve System is the key decision maker for monetary policy. Ceteris paribus, if the Fed reduces the discount rate, then: If the Fed wishes to increase the money supply it can: The incentive to borrow reserves decreases. The other five are presidents of the federal reserve district banks (there are 12 total). The Federal Reserve System is responsible for all of the following EXCEPT. When the Fed _____ bonds, the money supply _____. Members of the Federal Reserve Board of Governors are appointed to 14-year terms to provide a level of isolation from political influence. Its main policy tools is the target for the federal funds rate (the rate that banks charge each other for short-term loans), a key short-term interest rate. The Federal Reserve is responsible for regulating the U.S. monetary system and setting monetary policy. Members of the Federal Reserve Board of Governors are appointed for one fourteen-year term: The chairman can be reappointed for more than one term. They are equal to the required reserve ratio times transactions deposits. The chairman of the Federal Reserve Board of Governors: A. Checks are cleared between private banks by: The 12 regional Fed banks do all of the following except: Make their decisions based on economic, rather than political, considerations. In its role as bank for the U.S. government, the Federal Reserve performs all of the following services, except: A. maintaining the U.S. Treasury's bank account. The discount rate is the interest rate charged by: The rate of interest banks charge each other for lending reserves is the: Which of the following lends reserves to private banks? Which of the following serves as the central banker for private banks in the United States? To decrease the money supply the Fed can: When the Fed announces that it is raising the federal funds rate, this signals its intention to _______ bonds in the open market and _______ the money supply. What The president of the United States. Federal Advisory Council. The Federal Reserve derives its authority from the Congress, which created the System in 1913 with the enactment of the Federal Reserve Act. … B. set the discount rate. By raising or lowering the _______, the Fed changes the cost of money for banks, which impacts the incentive to borrow reserves. Suppose Alan receives a check for $300 from a bank in Dallas. Aggregate demand will shift to the right and the unemployment rate will fall. Using the aggregate supply drawn under the monetarist view, what should happen to the equilibrium price level and quantity of output if the Fed buys bonds? Equilibrium price level should increase and equilibrium output should stay constant. Discretionary policy calls for continual adjustments to the money supply and is associated with the monetarist perspective. If the Federal Reserve wanted to stimulate the economy, it would most likely: A. reduce the discount rate. Suppose the banks in the Federal Reserve System have $100 million in transactions accounts and the reserve requirement is 0.10. The Federal Reserve has a balance sheet of $4.5 trillion, which includes $2.5 trillion of the U.S. federal debt. Correct Answer(s) Drag Appropriate Answer(s) Here Set The Required Reserve Ratio For Banks. The Board of Governors consists of seven members elected by the public every four years. c. Regulating the banking industry and providing banking services. One News Wire article in the text has the title "Fed Cuts Key Interest Rate Half-Point to 1 Percent." A commercial bank is a private bank primarily concerned with maximizing its revenue by holding deposits and making loans and investments with a portion of those deposits. Federal Reserve Board announces results from second round of bank stress tests will be released Friday, December 18, at 4:30 p.m. EST Press Release - … When the Fed sells bonds in the open market, interest rates _______ and aggregate demand shifts to the _______. d. Managing the national money supply to meet current demand. to achieve stable prices, full employment, and economic growth. Includes the 7 members of the board of governors. If the Fed buys more bonds from the public, then the money supply will: Reduce the reserve requirement, reduce the discount rate, or buy bonds. With an upward-sloping aggregate supply curve, tight monetary policy: Which of the following policies supports the concept of continual adjustment of the money supply to achieve macroeconomic goals? A. he Federal Reserve System's responsibilities include: conducting monetary policy; supervising and regulating financial institutions; providing services to depository institutions, the federal government… The board consists of the seven governors, appointed by the president and confirmed by the Senate. Changes in the discount rate. Which of the following will cause a decrease in aggregate demand? Board of Governors only. The primary responsibilities of the Federal Reserve Board are the formulation and conduct of monetary policy and the supervision and regulation of banks. If a bank does not have enough reserves, it can: Which of the following is not a possible source of last-minute reserves for a private bank? e. seven members nominated by the President and confirmed by the Senate. --Discount Rate--the interest rate charged by Federal Reserve Banks to depository institutions on short-term loans. The voting members of the Federal Open Market Committee are all of the members of the Board of Governors and all of the president Reserve banks. Congress and the president are the key decision makers for U.S. monetary policy. Ceteris paribus, the amount of required reserves decreases when the dollar volume of transactions accounts increases. Which of the following is often described as the most powerful person in the U.S. economy? The Fed creates money through … Which of the following is not true about excess reserves? A. A decrease in the reserve requirement will cause a decrease in the money multiplier. Discretionary policy. All seven Board members sit on the Federal Open Market Committee which makes key decisions affecting the availability of money and credit in the economy. The Federal Reserve uses a variety of policy tools to foster its statutory objectives of maximum employment and price stability. The main responsibility of the chairman is to carry out the mandate of the Fed, which is to promote the goals of maximum employment, stable prices, and moderate long-term interest rates… Ceteris paribus, which of the following will occur if the Fed buys bonds through open-market operations? All of the following are true about the basic money supply except: Includes currency and transactions accounts. Ceteris paribus, if the reserve requirement is increased to 0.20, then excess reserves will: Suppose the banks in the Federal Reserve System have $100 million in transactions accounts and the reserve requirement is 0.10. The equilibrium price level and equilibrium output should both increase. The interest received on that debt is given The chairman and vice-chairman are appointed to four-year terms and may be reappointed subject to term li… Fed purchases of bonds from the public, called open market operations: In 2008, the Fed _____ the discount rate in order to _____ the economy. Proponents of monetary policy based on fixed rules base their position on the assumption of a vertical aggregate supply curve. Ceteris paribus, if the reserve requirement is decreased to 0.05, then excess reserves will increase by: Suppose the banks in the Federal Reserve System have $1 billion in transactions accounts and the reserve requirement is 0.20. Profit-maximizing banks try to keep their excess reserves as high as possible. Governors serve 14-year, staggered terms to ensure stability and continuity over time. Is the number of deposit dollars the banking system can create from $1 of excess reserves. The Fed directly affects your stock and bond mutual funds and your loan rates. Are the minimum amount of reserves a bank is required to hold. --Reserve Requirements--the portions of deposits that banks must maintain either in their vaults or on deposit at a Federal Reserve Bank. What are the responsibilities of the Federal Reserve? If the Fed is concerned about inflation, it should: If unemployment is a problem, the Fed could ______ bonds and ______ the reserve requirement. The Federal Reserve directly affects the ability of banks to __________. They each serve as chairman of the Board of Governors on a rotating basis. The Fed decides the percentage of __________ that banks are required to hold as reserves. The First Bank of the United States (1791–1811) and the Second Bank of the United States (1817–1836) each had a 20-year charter. The Federal Reserve Board of Governors consists of: a. All of the following are roles of money EXCEPT a: A. medium of exchange. The money multiplier decreases. Today, … Which of the following is not a basic monetary policy tool used by the Fed? If the Fed wants to stimulate aggregate demand it should _____ bonds to _____ the money supply. By changing the reserve requirement the Fed can change the level of bank reserves and the lending capacity of the banking system. Decrease and the aggregate demand curve will shift to the right. If the Fed wants to reduce bank reserves, it can: Total quantity of output demanded at alternative price levels. The Board of Governors in Washington, D.C., is an agency of the federal government and reports to and is directly accountable to the Congress. Given an upward-sloping aggregate supply curve, which of the following is most likely to occur if the Fed pursues restrictive monetary policy, ceteris paribus? The Federal Reserve is the central bank of the United States; it serves as a banking institution for commercial banks to use and a way for the government to influence financial activity. It includes three key entities: the Board of Governors, 12 Federal Reserve … The shape of the _____ curve determines the impact of an aggregate demand shift on prices and output. D. mint bills and coins. Increase and the aggregate demand curve will shift to the right. Federal Reserve Board announces annual indexing of reserve requirement exemption amount and of low reserve tranche for 2021 Press Release - 12/7/2020 . Raise the reserve requirement, raise the discount rate, or sell bonds. Act As A Bank For Banks, Both Accepting Deposits And Extending Loans. The Federal Reserve System performs five functions to promote the effective operation of the U.S. economy and, more generally, to serve the public interest. As the money supply increases, interest rates _______ and aggregate demand shifts to the _______. Explanation: The Federal Reserve System is the central bank of the United States. The interest rate private banks charge each other for lending reserves is called the federal funds rate. If the Fed sells more bonds to the public, then the money supply will shift to the left. The different shapes of the aggregate supply curve: The equilibrium output will increase but the price level will stay the same until full employment is reached. He deposits the check in his account at his Baltimore bank. A combination of flexible rules and limited discretion. But Congress wanted the Fed to have 12 regional banks to represent America's diverse regions. Is elected by U.S. voters. According to the monetarist view, the aggregate supply curve is: Vertical at the natural rate of unemployment. Which of the following is not a monetary policy tool for shifting the aggregate demand curve? Using aggregate supply and demand curves drawn according to the Keynesian view, which of the following will occur if the Fed buys bonds in the open market and the economy is below full employment? b. increase interest rates Increasing inequality in the distribution of income can contribute to a situation known as __________, which is becoming more common in America. The guiding philosophy behind the formation of the Federal Reserve System was a __________ decentralized bank run by the federal government. Combines elements of the monetarist and Keynesian assumptions about the shape of aggregate supply. C. control the monetary base. A. group of 12 Federal Reserve Bank presidents only. Ceteris paribus, if the reserve requirement is decreased to 0.07, then excess reserves will increase by: The Federal Reserve when it lends money to private banks. If the Fed sells more bonds to the public, then the money supply will: A. 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