Ch. 13 Flashcards
(17 cards)
discount rate
The interest rate the Fed charges depository institutions that borrow reserves from it; the interest rate charged on a discount loan.
federal funds market
A market where banks lend reserves to one another, usually for short periods.
term auction facility (TAF) program
A program under which the Fed auctions funds to depository institutions. Each TAF auction is for a fixed amount, with the TAF rate determined by the auction process (subject to a minimum bid rate).
open market sale
The selling of government securities by the Fed.
U.S. Treasury Securities
Bonds and bond-like securities issued by the U.S. Treasury when it borrows.
federal funds target rate
The interest rate that the Fed wants the federal funds market rate to be.
monetary policy
Changes in the money supply or in the rate of change of the money supply, intended to achieve stated macroeconomic goals.
Board of Governors
The governing body of the Federal Reserve System.
open market operations
The buying and selling of government securities by the Fed.
cash leakage
Occurs when funds are held as currency instead of deposited into a checking account.
simple deposit multiplier
The reciprocal of the required reserve ratio, 1/r.
reserve deficient
The situation that exists when a bank holds fewer reserves than specified by the reserve requirement.
discount loan
A loan the Fed makes to a commercial bank.
Federal Open Market Committee (FOMC)
The 12-member policy-making group in the Fed. The committee has the authority to conduct open market operations.
federal funds rate
The interest rate in the federal funds market; the interest rate banks charge one another to borrow reserves.
open market purchase
The buying of government securities by the Fed.
reserve requirement
The Fed rule that specifies the amount of reserves a bank must hold to back up deposits.
