Chapter 13 Flashcards Preview

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Flashcards in Chapter 13 Deck (17):
1

When the federal government incurs a budget deficit, it will

Borrow money from the public by issuing securities

2

Open market operations are the

Buying and selling of government securities by the Fed

3

what policy making groups is the Board of Govs of the Fed a part of?

Federal open market committe

4

which is not a responsibility of the fed?

determining tax rates

5

open market operations are conducted by the

federal reserve bank of new york

6

what are open market operations?

buying and selling of the govt securities by the Fed

7

When the federal govt incurs a budget deficit, it will

borrow money from the public by issuing securities

8

if the fed wants to invrease the money supply through an open market operation, it will

purchase govt securities

9

the fed can change the money supply by changing

the required reserved ratio

10

when one commercial bank borrows from another bank, it pays the ________ rate

federal funds

11

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

12

what will increase the money supply?

a decrease in the required reserve ratio

13

increase reserve ratio = _____ in money suppply and excess reserves _______

decrease
decrease

14

decrease reserve ratio = _____ in money supply and excess reserves ______

increase
increase

15

what leads to an increase in money supply?

Fed purchases of govt securities

16

the lower the required reserve ratio,

the larger the simple deposit multiplier

17

An open market ______ by the fed increases money supply, a ______ in the reserve ratio increases the money supply

purchase, decrease