Flashcards in Week 5- Monetary system problem set Deck (27):
Ben Bernanke appointed___
Chair of the Board of Governor in 2009 by President Obama.
Federal Reserve responsible for___
regulating money supply in the US.
What do you call a Common function of most other financial assets?
store of value.
ALL items that are included in M1 are also___
included in M2.
Discount rate are___
interest rate that the Fed charges banks that borrow reserves from it.
Increasing the gov’t budget deficit is not a tool for___
When Fed conducts open-market sales it sells___
Treasury securities which decreases money supply.
Fed sells gov’t bonds, and in so doing___
decreases money supply.
Fed buys gov’t bonds from___
When Fed conducts open-market purchases it buys___
Treasury securities, which increases the money supply.
The Most liquidity: highest to lowest___
currency, stocks, fine art.
Liquidity refers to___
the ease with which an asset is converted to the medium exchange.
IF discount rate lowered, banks borrow___
more from Fed so reserves increase.
In fractional-reserve banking system, bank keeps___
only a fraction of its deposit in reserve. Banks generally lend out a majority of the funds deposited.
Credit cards not included in___
There’s a short-run trade-off btwn___
inflation and unemployment.
Demand deposits are a type of___
Fed has power to increase or decrease number of dollars in the economy through___
In recent years, Federal Open Market Committee focused on a target for___
federal funds rate.
Federal funds rate is the interest rate___
banks charge each other for short-term loans.
Prisoners sometimes determine a single goods to be used as money. The good___
becomes a medium of exchange and a unit of account.
Voting members of Federal Open Market Committee includes: 5, president of, and 7___
• 5 presidents of regional Federal Reserve banks.
• President of the Federal Reserve Bank of New York.
• 7 Board of Governors.
When bank loans out $1,000, the money supply___
M1 consist of___
currency + checkable deposits.
Federal Reserve note are___
nation’s currency in paper money.
M2 are highly___
liquid assets. They do not function as medium of exchange but can be converted into currency.
M2= M1 + near monies.