Flashcards in Chapter 13 Deck (17):
When the federal government incurs a budget deficit, it will
Borrow money from the public by issuing securities
Open market operations are the
Buying and selling of government securities by the Fed
what policy making groups is the Board of Govs of the Fed a part of?
Federal open market committe
which is not a responsibility of the fed?
determining tax rates
open market operations are conducted by the
federal reserve bank of new york
what are open market operations?
buying and selling of the govt securities by the Fed
When the federal govt incurs a budget deficit, it will
borrow money from the public by issuing securities
if the fed wants to invrease the money supply through an open market operation, it will
purchase govt securities
the fed can change the money supply by changing
the required reserved ratio
when one commercial bank borrows from another bank, it pays the ________ rate
the lower the discount rate relative to the federal funds rate, the more likely a cmmercial bank will borrow from
the fed instead of another commercial bank
what will increase the money supply?
a decrease in the required reserve ratio
increase reserve ratio = _____ in money suppply and excess reserves _______
decrease reserve ratio = _____ in money supply and excess reserves ______
what leads to an increase in money supply?
Fed purchases of govt securities
the lower the required reserve ratio,
the larger the simple deposit multiplier