Module 27

Question 1

functions of the federal reserve system

Answer 1

1) providing financial services (the banker’s bank)
2) supervise and regulate banking institutions
3) maintain the stability of the financial system
4) conduct monetary policy

Question 2

what the fed does

Answer 2

1) set the reserve requirement
2) set the discount rate
3) open market operations

Question 3

federal funds market

Answer 3

allows banks that fall short of the reserve requirement to borrow funds from banks with excess reserves overnight

Question 4

federal funds rate

Answer 4

interest rate in the federal funds market

Question 5

discount rate

Answer 5

interest rate the fed charges to loans on banks in the discount window

Question 6

open market operations

Answer 6

purchase and sale of govt debt (treasury bills) fy the fed from commercial banks

Question 7

the fed’s assets

Answer 7

holdings of debt issued by the government

Question 8

the fed’s liabilities

Answer 8

monetary base

the currency in circulation + bank reserves