Monetary Economics (ECS3701) Selected Examination Questions and Answers 2023

Document Content and Description Below

Discount Rate - -The interest rate financial institutions pay to the Federal Reserve to borrow reserves -Federal Open Market Committee(FOMC) - -A policy-making group within the Federal Reserve Syst... em that directs the open market operations of the system -Federal Reserve System - -The Central Banking system and monetary authority of the US, made up of regional Federal reserve banks and the federal reserve board of governors which supervises and examines state chartered member banks, regulates bank holding companies, and is responsible for the conduct of monetary policy -Monetary Policy - -Government policy concerning money and credit conditions especially the rate of growth in the money supply and the level of interest rates -Open Market Operations - -The purchase and sale of government securities by the Fed in order to control levels of bank reserves. Those aimed at defending a target level of reserves from outside influences are "defensive" open market operations; those aimed at changing the level of reserves are "dynamic" open market operations -Reserve Requirement - -Funds that a bank must hold in the form of vault cash or deposits at the Fed to meet its required reserve ratio. It is a ratio of bank reserves to deposits -Demand Deposits Expansion Multiplier - -The number that when multiplied by the level of reserves determines the maximum amount of demand deposits. In its simplest form, it equals the inverse of the required reserve ratio. [Show More]

Last updated: 1 year ago

Preview 1 out of 7 pages