The Federal Reserve Act of 1977 modified the original act establishing the Federal Reserve in 1913 and clarified the roles of the Board of Governors and Federal … 50 members selected by state legislatures. According to the Keynesian view of aggregate supply, an increase in the money supply will: Perfectly vertical at the natural rate of unemployment. Cause inflation if the economy is at full employment. Implementing fiscal policy concerning taxation and government spending. Which of the following best describes the eclectic aggregate supply curve? Fed purchases of bonds from the public, called open market operations: In 2008, the Fed _____ the discount rate in order to _____ the economy. 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. d. seven members elected by Congress. If the Fed sells more bonds to the public, then the money supply will: A. B. store of value. E. Members of the Federal Reserve Board of Governors are appointed to 14-year terms to provide a level of isolation from political influence. The Federal Reserve Board of Governors consists of: a. B. set the discount rate. C. control the monetary base. Aggregate demand will shift to the right and the unemployment rate will fall. Which of the following is not a monetary policy tool for shifting the aggregate demand curve? The interest rate private banks charge each other for lending reserves is called the federal funds rate. Suppose Alan receives a check for $300 from a bank in Dallas. 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? At that time, President Woodrow Wilson wanted a government-appointed central board. Decreasing the discount rate and buying bonds, Monetary policy directed at expanding GDP growth would include the following? --Reserve Requirements--the portions of deposits that banks must maintain either in their vaults or on deposit at a Federal Reserve Bank. The Fed decides the percentage of __________ that banks are required to hold as reserves. Which of the following cannot be used to shift aggregate demand? When the Fed sells bonds in the open market, interest rates _______ and aggregate demand shifts to the _______. First horizontal, then upward sloping, and finally vertical. A decrease in the reserve requirement will cause a decrease in the money multiplier. Apply A Countercyclical Economic Policy To The Money Supply. 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. The Federal Reserve banks clear checks between private banks, hold bank reserves, provide currency for banks, and make loans to private banks. When the Fed _____ bonds, the money supply _____. The key decision maker for general Federal Reserve policy is the: The key decision maker for U.S. monetary policy is: Seven members appointed by the president of 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. Ceteris paribus, the amount of required reserves decreases when the dollar volume of transactions accounts increases. he Federal Reserve System's responsibilities include: conducting monetary policy; supervising and regulating financial institutions; providing services to depository institutions, the federal government… Which of the following will cause a decrease in aggregate demand? The group responsible for deciding on monetary policy is the Federal Open Market Committee. When the Fed sells bonds, bank reserves increase. Raise the reserve requirement, raise the discount rate, or sell bonds. Both monetary policy and fiscal policy shift the aggregate demand curve. b. If the Fed sells more bonds to the public, then the money supply will shift to the left. The Federal Reserve is responsible for overseeing all depository institutions. Discretionary policy calls for continual adjustments to the money supply and is associated with the monetarist perspective. 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. The Federal Reserve System, often referred to as the Federal Reserve or simply "the Fed," is the central bank of the United States. 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. measure of wealth. Correct Answer(s) Drag Appropriate Answer(s) Here Set The Required Reserve Ratio For Banks. Ceteris paribus, if the Fed reduces the reserve requirement, then: Is the reciprocal of the required reserve ratio. It was created by the Congress to provide the nation with a safer, more flexible, and more stable monetary and financial system. A particularly severe crisis in 1907 led Congress to enact the Federal Reserve Act in 1913. 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. Federal Advisory Council. Given an upward-sloping aggregate supply curve, which of the following is most likely to occur if the Fed sells bonds in the open market, ceteris paribus? The use of money and credit controls to change macroeconomic activity is known as: Monetary policy involves the use of money and credit controls to: Federal Reserve System's control over the money supply. 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. Monetary policy involves the use of federal government spending to change the money supply. 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. What are the responsibilities of the Federal Reserve? 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? more Central Bank Definition When the Fed sells bonds, the quantity of reserves in the banking system declines and the money supply decreases. If the Fed wishes to decrease the money supply it can: The policy lever most commonly used by the Fed is: A. The Federal Reserve is responsible for regulating the U.S. monetary system and setting monetary policy. The president of the United States. They are equal to the required reserve ratio times transactions deposits. The Fed creates money through … The Federal Reserve System is responsible for all of the following EXCEPT. If the Fed wants to reduce bank reserves, it can: Total quantity of output demanded at alternative price levels. Which of the following is the Fed trying to accomplish as a result of this action? A vertical aggregate supply curve favors which of the following policies? The impact of monetary policy on prices and output depends on the. 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. Lower average prices and more unemployment. Are the minimum amount of reserves a bank is required to hold. By changing the reserve requirement the Fed can change the level of bank reserves and the lending capacity of the banking system. 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. monetary policy, regulate financial institutions, services to depository institutions, federal government, and the public. b. The Federal Reserve System Purposes & Functions 23 The Federal Reserve’s Monetary Policy Mandate and Why It Matters The Federal Reserve was created by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and finan-cial system. D. Only A and C are correct. Selling bonds and increasing the discount rate. The reserve requirement is the tool used least frequently by the Fed because it can cause abrupt changes in the money supply. Explanation: The Federal Reserve System is the central bank of the United States. Discretionary policy. The other five are presidents of the federal reserve district banks (there are 12 total). Which of the following is often described as the most powerful person in the U.S. economy? The money multiplier and excess reserves. If the Fed wants to increase the money supply, it should increase the discount rate. The Federal Reserve derives its authority from the Congress, which created the System in 1913 with the enactment of the Federal Reserve Act. Congress and the president are the key decision makers for U.S. monetary policy. --Discount Rate--the interest rate charged by Federal Reserve Banks to depository institutions on short-term loans. If the Federal Reserve Board wanted to slow the rate of economic growth, it would most likely _____. 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. Can cause abrupt changes in the money supply. Ceteris paribus, if the Fed raises the discount rate, then: A. It includes three key entities: the Board of Governors, 12 Federal Reserve … According to the monetarist view, the aggregate supply curve is: Vertical at the natural rate of unemployment. 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. Federal Reserve Board announces annual indexing of reserve requirement exemption amount and of low reserve tranche for 2021 Press Release - 12/7/2020 . 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 - … The Federal Reserve has a balance sheet of $4.5 trillion, which includes $2.5 trillion of the U.S. federal debt. 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 shape of the _____ curve determines the impact of an aggregate demand shift on prices and output. The chairman and vice-chairman are appointed to four-year terms and may be reappointed subject to term li… … Makes critical decisions. Monetary policy involves the use of money and credit controls to impact the macroeconomy. 12 members, one from each Federal Reserve District. If the Fed wants to stimulate aggregate demand it should _____ bonds to _____ the money supply. The Federal Reserve banks accept deposits from individuals and banks. The primary responsibilities of the Federal Reserve Board are the formulation and conduct of monetary policy and the supervision and regulation of banks. One News Wire article in the text is titled "Fed Cuts Key Interest Rate Half-Point to 1 Percent." d. Managing the national money supply to meet current demand. One of the portfolio choices people must make is whether to deposit idle funds in a bank or purchase government bonds. The Board of Governors, also known as the Federal Reserve Board, is the national component of the Federal Reserve System. The Federal Reserve, as America's central bank, is responsible for controlling the money supply of the U.S. dollar. By buying bonds, the Fed decreases the quantity of reserves in the banking system and decreases the money supply. 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… The interest received on that debt is given A. Today, … Act As A Bank For Banks, Both Accepting Deposits And Extending Loans. The Federal Reserve was created on December 23, 1913, when President Woodrow Wilson signed the Federal Reserve Act into law. Which of the following is responsible for providing currency and cash to banks? Providing banking and fiscal services to the federal government. Which of the following is responsible for holding bank reserves? The twelve regional Federal Reserve banks are responsible for: The Baltimore bank's regional Federal Reserve bank. Used a mix of money-supply and interest-rate adjustments. Changes in the discount rate. Keynesians believe a change in the money supply cannot lower the unemployment rate. B. To increase the money supply the Fed can: The aggregate demand curve should shift leftward. All of the following are true about the basic money supply except: Includes currency and transactions accounts. The institution responsible for managing a nation's money supply is the __________. The equilibrium price level and equilibrium output should both increase. The Fed directly affects your stock and bond mutual funds and your loan rates. Within the structure of the Federal Reserve System, each of the following is a depository institution EXCEPT. One News Wire article in the text has the title "Fed Cuts Key Interest Rate Half-Point to 1 Percent." group of 12 Federal Reserve Bank presidents only. The Federal Reserve Act states that the Board of Governors a. Question: Which Of The Following Are Responsibilities Of The Federal Reserve? But Congress wanted the Fed to have 12 regional banks to represent America's diverse regions. Combines elements of the monetarist and Keynesian assumptions about the shape of aggregate supply. The board consists of the seven governors, appointed by the president and confirmed by the Senate. The Federal Reserve System monitors and regulates the US __________ and __________ system. The Board of Governors, located in Washington, D.C., provides the leadership for the System. Which of the following is not true about excess reserves? 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. Board of Governors only. Equilibrium price level should increase and equilibrium output should stay constant. The Federal Reserve uses a variety of policy tools to foster its statutory objectives of maximum employment and price stability. 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 System is the central bank of the United States and provides the nation with a safe, flexible, and stable monetary and financial system. Profit-maximizing banks try to keep their excess reserves as high as possible. Determine the impact of monetary policy on price level and output. Ceteris paribus, if the reserve requirement is decreased to 0.07, then excess reserves will increase by: 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. By increasing the required reserves, the banking industry will have more excess reserves available for lending. 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? The Federal Reserve is an independent entity established by the Federal Reserve Act of 1913. The chairman of the Federal Reserve Board of Governors: A. 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? The aggregate demand curve should shift rightward. 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. By raising or lowering the _______, the Fed changes the cost of money for banks, which impacts the incentive to borrow reserves. All of the following are roles of money EXCEPT a: A. medium of exchange. Founded in December 1913, it is what balances if not drives the Federal Reserves System. A. C. unit of account. 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? is the use of money and credit controls to influence macroeconomic activity. Both banks issued currency, made commercial loans, accepted deposits, purchased securities, maintained multiple branches and acted as fiscal agents for the U.S. Treasury. Which of the following is a tool of monetary policy? As monetary policy watchers descend upon Jackson Hole, Wyoming, for the Federal Reserve Bank of Kansas City’s annual economic policy symposium, we wanted to show the impact of the Federal Reserve on U.S. debt and deficits. A change in the reserve requirement is the tool used least often by the Fed because it: Bank reserves in excess of required reserves. Suppose the banks in the Federal Reserve System have $400 million in transactions accounts and the reserve requirement is 0.10. A.It is the only Federal Reserve bank that is a member of the Bank for International Settlements (BIS). Serves a four-year term and can be reappointed. Which of the following is not true about the members of the Federal Reserve Board of Governors? tend to increase reserves in the system leading to reductions in interest rates. If the Federal Reserve wanted to stimulate the economy, it would most likely: A. reduce the discount rate. A. They each serve as chairman of the Board of Governors on a rotating basis. 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. The Federal Reserve directly affects the ability of banks to __________. What A change in the reserve requirement affects: The lending capacity of the banking system decreases. Governors serve 14-year, staggered terms to ensure stability and continuity over time. Which of the following is true about the chairman of the Federal Reserve Board of Governors? The Federal Reserve is the central bank of the United States. consists of seven members appointed by the President of the United States, who together act as the key decision-making entity for monetary policy. Which of the following is not a basic monetary policy tool used by the Fed? Which of the following will occur if the Fed raises the reserve requirement, ceteris paribus? Which of the following will cause an increase in aggregate demand? to achieve stable prices, full employment, and economic growth. The Board of Governors consists of seven members elected by the public every four years. 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? Which of the following serves as the central banker for private banks in the United States? 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. e. seven members nominated by the President and confirmed by the Senate. The Board of Governors of the Federal Reserve System is the key decision maker for monetary policy. The money multiplier decreases. The New York Federal Reserve is actively involved in the bond and foreign exchange markets. 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. Fact: The Federal Reserve Board was responsible for the events of the late 70s and 80s. The purchase of bonds in the open market by the Fed. Is elected by U.S. voters. The press scrutinizes the Federal Reserve for clues on how the economy is performing and what the FOMC and Board of Governors plan to do about it. 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. 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. Is to consider the American economy above all official decisions a.it is the __________ ability... 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