ECONOMICS: Chapter 15 Questions – The Federal Reserve
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Ch. 15.1: The Federal Reserve System & Monetary Policy
	
1. 	Study the Figure 15.1 on page 392. Which group buys stock in a Federal Reserve Bank?

2. 	Study the Figure 15.1 on page 392. Which group decides whether to raise or lower interest rates?

3. 	Study the Figure 15.1 on page 392. The president of the United States appoints members of which group?

4. 	How many Federal Reserve district banks are in the United States?

5. 	Which types of institution must belong to the Federal Reserve?

6. 	The Federal Reserve is responsible for monetary policy in (where?) __________________________________________. 

7. Interest rates are affected by decisions of this group.

8. This is the process in which a check that has been deposited is transferred to the issuer’s depository institution.

9. This involves changing the rate of growth of the money supply in order to affect the cost and availability of credit.

10. This is the 12 member committee in the Federal Reserve System that decides how to control the nation’s money supply.

11. This is the nickname / abbreviation for the Federal Reserve System.

Ch. 15.2: Money Supply and the Economy

12. 	Study Figure 15.4 on page 399.  What might a Loose Money Policy lead to? 

    What might a Tight Money Policy lead to?

13. When credit is inexpensive and easy to get the Fed is probably using what type of money policy?

14. When credit is expensive and in short supply the Fed is probably using what type of money policy?

15. This is the system in which only a portion of the deposits in a bank is kept on reserve.

16. Explain reserve requirements. What would a reserve requirement of 10 percent mean?

Ch. 15.3: Regulating the Money Supply

17. 	How might a bank respond to an increase in interest rates by the Federal Reserve?

18. 	Review the “Policies For Growth” assignment and review why the Fed would lower interest rates.

19. 	List several ways the Federal Reserve can affect the money supply.

 
20. 	The main tool the Fed uses to affect interest rates is ______________________________________________.

21. 	Review the chart on page 403. Complete the chart on page 407 (2).

 
21. 	If a bank increases its reserves what will it be able to do?

	22. This is the interest rate the Fed charges on loans to member banks?

23. This is the interest rate that banks charge each other on loans (usually overnight)?

	24. The buying and selling of U.S. securities by the Fed to affect the money supply is known as this.