Federal funds rate is the interest rate that commercial banks borrow and lend among themselves from their excess reserves on overnight basis. The correct statement is “The Federal Reserve does not set the federal funds rate, but influences it through the use of its open market operations.” This is because while the Federal Reserve can set a target for the federal funds rate, it cannot mandate banks to follow that rate. So, the Federal Reserve adjusts the supply of reserve balances to ensure that the federal funds rate is always around the pre-determined target.
Question 39 (1 point) Which of the following statements is true? O A) The Federal Reserve...
18. Suppose the Federal pose the Federal Reserve opted to implement monetary policy by decreasing the interest id on excess reserves. This would be an example of a. Expansionary monetary policy b. Contractionary monetary policy c. Discretionary monetary policy d. Exemplary monetary policy 19, A policy decision by the Federal Reserve to sell short-run U.S. securities out of the New York branch would be an example of a. Expansionary monetary policy through decreasing the federal funds rate b. Contractionary monetary...
8. Federal funds rate targeting Aa Aa In conducting monetary policy, the Federal Open Market Committee (FOMC) targets a Federal funds rate and the Federal Reserve Bank of New York uses open-market operations to achieve and maintain the target rate. Suppose that the following graph shows the demand for Federal funds. Use the orange line (square symbols) to plot the supply of Federal funds (also called "the supply of excess reserves") when the FOMC targets a Federal funds rate of...
5. The Federal Reserve's organization There are Federal Reserve regional banks. Which of the following is a responsibility of the Federal Open Market Committee (FOMC)? Issuing mortgages to homeowners Making decisions regarding monetary policy Buying and selling stocks The Federal Reserve's primary tool for changing the money supply is the U.S. economy (the money supply), the Federal Reserve will In order to increase the number of dollars in government bonds. 5. The Federal Reserve's organization There are Federal Reserve regional...
1. Why was the Federal Reserve System set up with twelve regional Federal Reserve Banks, rather than one central bank as in other countries? 2. Which entities in the Federal Reserve System control the discount rate? Reserve requirements? Open market operations? 3. In what ways can the regional Federal Reserve Banks influence the conduct of monetary policy? 4. How is the president of the United States able to exert influence over the Federal Reserve?
Suppose the Fed wanted to engage in an expansionary monetary policy. Which of the following should it do? a. Increase the reserve requirement ratio. b. Buy bonds on the open market. c. Sell bonds on the open market. d. Lower taxes. e. Increase the discount rate. The interest rate at which banks can borrow funds from the Fed is known as… a. the federal funds rate. b. the discount rate. c. the prime rate. d. the real interest rate. e....
QUESTION 20 One reason the Federal Reserve System was set up in 12 regional Federal Reserve banks was to _ maximize the prestige of the FRD of NY make sure all regions of the country were represented in monetary policy deliberations o insure more influence was given to New York and Dallas help make the FOMC more effective QUESTION 21 The twelve Federal Reserve banks advise on the ___ discount rate Reserve Reequirements Open Market Operations printing of currency
The Federal Reserve adjusts interest rates indirectly through which of tools? Group of answer choices federal tax policy reserve requirement open market operations discount rate
The Federal Reserve generally uses ___________________ to implement monetary policy. reserve requirements discount policies government spending and taxes fiscal policy open market operations
“The Federal Reserve sets U.S. monetary policy in accordance with its mandate from Congress: to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy”. “The Federal Reserve achieves these goals by managing the level of short-term interest rates—specifically, by setting a target (or target range) for the federal funds rate, which is an overnight, unsecured, interbank borrowing rate. The level of short-term interest rates then influences the availability and cost of credit in the economy,...
9 In the U.S econormy the money supply is cot A) U.S Treasury. B) Federal Reserve System D) Senate Committee on Banking and Finance. 10. Ceteris paribus, if the Fed raised the required reserve ratio A) Banks could increase their lending B) The Federal funds interest rate would rise. The size of the monetary multiplier would decrease. D) The size of the monetary multiplier would increase. 11. Money is created when A) Loans are made. Checks written on one bank...