2. In order to be a commercial bank at the national level, a bank MUST be member bank of the Fed.

3. In order to be a commercial bank at the state level, a bank MUST be member bank of the Fed.

4. The Fed is, by design, a stock corporation, with its members (member banks) holding stock.

5. The Fed is led by a nine-member Board of Governors, that are appointed by the president and approved by the Senate just like the Supreme Court.

6. The Governors also serve life terms like the Supreme Court as well.

7. The Board of Governors serve 14 year terms and the appointments are staggered allowing a vacancy every two years.

8. The board reports monthly to Congress and puts out an annual bulletin that covers national and international monetary matters.

9. How many Federal Reserve district banks are there?

10.The Federal Open Market Committee is the Fed's primary policy-making body because it has control over interest rates.

11. The Federal Open Market Committee (FOMC) has 12 voting members: the seven member Board of Governors, the president of the New York district Fed, and four district Federal Reserve Bank presidents from the other 11 districts who serve one-year rotating terms.

12. The FOMC meets 12 time a year.

13. The most important advisory committee to the Board of Governors is the Federal Advisory Council.

14. The Federal Advisory Council consists of two representatives from all 12 district banks.

15. The Federal Advisory Council meets once a quarter to advise the board on matters concerning the overall health of the economy.

16. The Fed is responsible for maintaining currency, this means the Fed _____________.

17. Acting as the government's bank is the most important responsibility the Fed has.

18. Conducting monetary policy is the most important responsibility the Fed has.

19. Under a fractional reserve system, banks are required to keep a portion of their total deposits in the form of legal reserves.

20. Legal reserves are coins and currency that banks hold either in their own vaults and or deposits into the Fed.

21. Those reserves member banks deposit at the Fed are called member bank reserves (MBR).

22. Interest rates are the price of credit to the loaner.

23. Th fed conducting monetary policy --changes in the money supply that affect the availability and cost of credit and, in turn,affects interest rates and influences economic activity is

24. Monetary policy is based on the mechanism of supply and demand.

25. Easy money supply is monetary policy resulting in higher interest rates and restricted access to credit; associated with the contraction of the money supply.

26. Tight money supply is monetary policy resulting in lower interest rate and greater access to credit; associated with the expansion of the money supply.

27. Easy money supply is monetary policy resulting in lower interest rate and greater access to credit; associated with the expansion of the money supply.

28. Tight money supply is monetary policy resulting in higher interest rates and restricted access to credit; associated with the contraction of the money supply.

29. Within the limits that Congress sets, the Fed can change the reserve requirements for all checking, time, and savings accounts.

30. Open market operations is a tool of monetary policy that involves the government.

31. Open market operations are purchases and sales of U.S. Treasury bills or notes.

32. The discount rate fluctuates based on the prime rate.

33. The prime rate fluctuates based on the discount rate.

34. The discount rate is the lowest rate of interest commercial banks charge their best customers.

35. The prime rate is the interest the Fed charges on loans to financial institutions.

36. Monetarism is a school of thought stressing the importance of stable monetary growth to control inflation and stimulate long-term economic growth.

37. Quantity theory of money is a hypothesis that the supply of money directly affects the price level over the long run.

38. Wage-price controls are policies and regulations making it illegal for firms to give raises or raise prices without government consent.

39. Which president tried to control inflation with wage-price controls?

40. The Council of Economic Advisers devise strategies and advise the US President on economic matters.