To deal with the financial crisis of 2007-2009, the Fed extended its lender of last resort function to include institutions other than banks. Which of the following Fed actions will increase the money supply? In order to lower the federal funds rate the Fed will ________________ securities on the open market which will ________________ the supply of reserves in the market for reserves, pushing the rate closer to the target rate. The minimum reserve is generally determined by the central bank to be no less than a specified percentage of the amount of deposit liabilities the commercial bank owes to its customers. When a commercial bank borrows from the Fed. 177. The lower the discount rate relative to the federal funds rate, the more likely a commercial bank will borrow from. 168. Lowering the bank reserve ratio has therefore increased the amount of money available to be loaned in the banking system, and vice versa when increasing in the bank reserve ratio. . Which of the following is not a monetary policy tool of the Fed? C.) Turns required reserves into excess reserves . b. sales and lowering the reserve requirement. If the required reserve ratio is 8%, checkable deposits (or the money supply), would _______________ by ________________ million, assuming that there are no cash leakages and that banks hold zero excess reserves. 167. Good luck!Need help? 99. It needs to balance economic growth with increasing inflation. One of the Fed's functions is to be the government's banker. The exact reserve ratio depends on the size of a bank's assets. If there are no excess reserves in the banking system and the Fed lowers the required reserve ratio, it follows that banks will now have __________, which they can use to extend loans and create new __________. The boundaries of the Federal Reserve districts were determined based on trade patterns between cities. Definition: Also known as Cash Reserve Ratio, it is the percentage of deposits which commercial banks are required to keep as cash according to the directions of the central bank. Lowering the required reserve ratio _____ the simple deposit multiplier and _____ the economy's maximum potential money supply. This means if a bank has deposits of $1 billion, it is required to have $110 million on reserve ($1 billion x .11 = $110 million), and could therefore make loans totaling $890 million. The interest rate that a commercial bank pays when it borrows from the Fed is the __________ rate. Here is how an open market purchase works: The Fed __________ government securities to (from) a commercial bank, which raises the bank's deposits at the __________ and increases the bank's __________. When the Fed purchases securities from a bank, it __________ reserves and ____________ the money supply. . 133. In this video I explain the reserve requirement, the money multiplier, and how money is created. Suppose that the Fed undertakes an open market sale, selling $1 million worth of securities to a bank. The __________ rate is the interest rate one bank pays another bank for a loan. Increases the total reserves in the banking system. 129. C. encourages discount loans. If the Fed lowers the discount rate at the same time it conducts an open market sale, it follows that. 136. a. raises the required reserve ratio from 8 percent to 10 percent; decrease b. lowers the required reserve ratio from 10 percent to 8 percent; increase c. lowers the required reserve ratio from 10 percent to 8 percent; decrease d. raises the required reserve ratio from 8 percent to 10 percent; increase e. a and b COUPON (1 days ago) The Federal Reserve discount rate is the rate that the U.S. central bank charges member banks to borrow from its discount window to maintain the bank's cash reserve requirements. 67. The president of the ________________________ holds a permanent seat on the FOMC. An open market __________ by the Fed increases the money supply; a(n) __________ in the required reserve ratio increases the money supply. It might offset the effect of this on the money supply by, Suppose the Fed forecasts a reduction in excess reserve holdings by banks.

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