Eco - Chapter 15 - The Federal Reserve System and Monetary

Which entity is responsible for implementing monetary policy in the United States?

• The Treasury Department
• The Federal Reserve
• The White House
• The Securities and Exchange Commission

The Federal Open Market Committee (FOMC) meets approximately how many times per year?

• Monthly
• Weekly
• Eight times
• Quarterly

What is the primary tool used by the Fed for implementing monetary policy?

• Setting the prime rate
• Changing reserve requirements
• Open-market operations
• Direct lending to banks

In fractional reserve banking, banks are required to keep what?

• All deposits in reserve
• No reserves
• A percentage of deposits as reserves
• Only government deposits

A loose money policy typically involves:

• Increasing interest rates
• Reducing money supply
• Selling government securities
• Lowering interest rates

The discount rate refers to:

• The rate charged on consumer credit cards
• The interest rate banks charge their best customers
• The rate the Fed charges banks for loans
• The rate of inflation

When banks exchange funds overnight, they charge each other the:

• Federal funds rate
• Prime rate
• Discount rate
• Treasury rate

Check clearing is the process of:

• Writing a check
• Transferring funds between banks
• Canceling a check
• Printing new checks

A tight money policy is typically used to:

• Stimulate economic growth
• Combat inflation
• Increase unemployment
• Lower tax rates

Open-market operations involve:

• Trading foreign currencies
• Buying and selling government securities
• Setting bank hours
• Regulating stock markets