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Chapter 14: Money, Banking, and Financial Institutions & Chapter 16: Monetary Policy Flashcards | StudBud
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Chapter 14: Money, Banking, and Financial Institutions & Chapter 16: Monetary Policy
Chapter 14: Money, Banking, and Financial Institutions & Chapter 16: Monetary Policy
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1
The Fed Discount Window has one main purpose and that is to help banks that are in trouble.
False
True
2
What is the Phillips Curve?
Plan to keep interests rates very low.
Shows the tradeoff between inflation and unemployment.
3
Credit cards ARE money supply
False
True
4
Vertical line in Economics means that entity has 100% control over the supply of that item.
False
True
5
If all American families suddenly paid off credit cards, home loans, then this event would reduce the US money supply
False
True
6
Monetary Policy is managed by US Congress.
False
True
7
TALF
Troubled Asset Lending Facility
Total Assets
The Federal Deposit Insurance Corporation
The Asset Loan Fund
8
When the Fed buys govt. bonds in the open marketplace, it is effectively
decreasing
the money supply.
True
False
9
Select the 3 functions of money
store of value
liquidity
Medium of exchange
unit of account
10
Open Market Operations is the primary way the US Federal Bank manages monetary policy.
True
False
11
The largest part of the Federal Reserve Bank balance is sheet made up of:
Mortgage backed securities
Stocks
The current yield
Their holdings of US govt. bonds
12
What happens when The Fed increases money supply?
None of the above.
Interests Rates Drop
Interests Rates Increase
Interests rates stay the same
13
The Prime Rate: The best rate is usually offered to the bank's best business customers.
True
False
14
Who typically gets the money created by the Federal Reserve?
All of the above.
U.S Banks and State Muni Bonds
The U.S. Treasury--Congress
Large U.S Corporations
15
The current yield is the interest rate that is paid to the investor.
True
False
16
The Discount Window is where banks go for emergency money and borrow from the Fed directly.
False
True
17
When banks borrow from other banks, this private market is known as the:
The Monetary Market for loans
False for all options
The overnight bank wire market
Fed Funds Market
18
When U.S. bond market prices rally, then this means that interest rates for short-term business loans will also go up?
True
False
19
MMMFs
Mutual Funds that invest in short-term securities.
money market deposit accounts
Money Market Mutual Funds
financial assets that are not a medium of exchange
20
The acceptability of paper money is strenghtened because the govt has designated currency as legal tender.
True
False
21
The Fed are
still
publishing the Excess Reserves report.
True
False
22
MZM is only slightly larger than M2
True
False
23
The value of money does not depend on supply and demand.
False
True
24
Liquidity
is the degree to which an asset can be converted quickly into cash with little or no loss of purchasing power.
True
False
25
IOER: The Federal Reserve currently pays banks interest if they deposit their money at the Federal Reserve Bank.
True
False
26
The Fed's Discount Window is open to all US corporations who have sales and assets above $1M.
False
True
27
Unit of account: standard unit in which prices can be stated and the value of goods and services can be compared.
True
False
28
The Federal Deposit Insurance Corporation (FDIC)
To ensure that commercial banks and pawnshops have enough cash in the vault
To ensure that commercial banks have enough cash in the vault
To ensure that credit unions, commercial banks, etc. have enough cash
The FDIC doesn't perform bank audits.
29
Liquidity trap: when monetary policy becomes ineffective due to very low-interest rates combined with consumers.
False: It means that the Fed's monetary policies are successful.
The Fed can lower rates all they want but they can't force people to borrow
30
Did the Fed ever do an official OE12 monetary stimilus?
Who knows...
Yes
NO
31
MV=PQ Formula
q=quatity produced
P=The Price Level Index or the Inflation Rate
V=Velocity
M=Money Supply
32
An economic strategy utilized by belligerent nations with the goal of weakening the economy of other states
Ponzi scheme
Economic warfare
33
M1 consists of cash and checking accounts. M1 is a basic measurement of U.S. money supply.
False
True
34
Only the Federal Reserve Bank can increase the money supply.
False
True
35
If the Fed suddenly sold their US government bond holdings to the public, this would do what?
We will all be rich
Raise interest rates
Lower the money supply
Raise the money supply
36
When banks borrow from other banks, what do they call the interest rate that they pay for these loans:
The Federal Reserve Bank Overnight Rate
The US Bank SHort-Term Rate
The DIscount WIndow Rate
The Fed Funds Rate
37
Medium of exchange
money
monetary policy
used for buying and selling goods and services.
transaction demand+the asset demand
38
The Federal Reserve Bank "totally controls" the Fed Funds rate.
True
False
39
The Fed's NEW digital current called?
BitCoin
DogeCoin
FedCoin
ReserveCoin
40
Transaction demand for money
None of the above
This means that people need cash to buy things
There is always a demand for cash
41
Every time there has been a deflation in US economic history, it has always followed by an economic depression.
True
False
42
Interest-bearing accounts offered by commercial banks and thrift institutions are called MMDAs
False
True
