Money Banking and the Federal Reserve

Which of the following is NOT one of the functions of the Federal Reserve?

• Performing banking functions for private banks

• Setting tax rates for Corporate banks

• Regulating banks

• Conducting monetary policy.

What do Fed member banks do with customer deposits?

• They use them to conduct monetary policy.

• They use them to enforce wage-price controls.

• They keep a portion as legal reserves and loan out a portion at interest.

• They use a portion to calculate interest rates and keep a portion as legal reserves.

Suppose the Fed wanted to engage in an expansionary monetary policy, which of the following should it do?

• Buy stocks on the stock market

• Increase the tax on bank profits.

• Decrease the administered interest rates

• Make it harder for banks to loan money to businesses.

Monetary policy refers to what the Federal Reserve does to influence the amount of __________ and __________ in the U.S. economy.

• Interest and debt

• Currency and gold reserves

• Money and credit

• Taxes and revenue

If the Federal Reserve wanted to stimulate the U.S. economy and reduce unemployment, it would

• cause interest rates to decrease because low interest rates encourage business growth and expansion.

• cause interest rates to rise because high interest rates encourage business growth and expansion.

• increase the administered interest rates, which would increase the money supply.

• increase consumer spending by reducing the money supply.

If someone robbed the bank and took all the money, your money in that bank would still be safe. Why?

• rich bankers would pay you back

• banks are insured by the FDIC

• you would hunt down the robbers

• Scooby Doo would find the robbers

Anything that's accepted in exchange for goods & services.

• Currency

• Money

• Liquidity

• Deferred Payment

Coins and paper that are used as money; 'legal tender'.

• Money

• Transfer Payments

• Currency

• Liquidity

A certain % of checkable deposits that banks keep on reserve.

• Reserve Requirement

• Excess Reserves

• Savings

• Fractional Reserve

The amount banks hold beyond required reserve; amount that banks can lend.

• Reserve Requirement

• Excess Reserves

• Multiplier

• Expansionary Effect