15

Question 1

What is money?

Answer 1

An asset people are willing to accept in exchange for goods and services or payments of debts
Widely accepted means of payment

Question 2

What is the Federal Reserve?

Answer 2

Central bank of the US. Bank of banks

Question 3

What is the monetary base?

Answer 3

Currency plus total reserves held at the fed

Question 4

What is M1?

Answer 4

currency plus demand deposits and other liquid deposits

Question 5

What is M2?

Answer 5

m1 plus money market mutual funds (short-term mutual fund) and small time deposits (short term savings account)

Question 6

What is the relationship between the Fed banks and the money supply?

Answer 6

monetary policy affects banks affects money supply
reserves of banks expand, expand money supply
Can add reserves to bank accounts at the fed (influence aggregate demand)

Question 7

What is the mission of the Fed?

Answer 7

Set monetary policy
payment services
supervision and regulation
financial system stability
consumer protection and community development

Question 8

What is the structure of the Fed?

Answer 8

Board of governers (seven members, 14 year terms)
12 fed reserve banks

Question 9

Federal open market commitee

Answer 9

sets monetary policy
all 7 board of governers
4 rotating presidents from federal reserve banks
president of ny federal reserve