The Banking System
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The Banking System
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25 Questions

1. The minimum fraction of deposits banks are required by law to keep as reserves.

2. Reserves greater than the required amounts

3. A system that permits banks to hold reserves of less than 100% against their deposits

4. 1. Board of governors 2. District & Regional Banks 3. Federal open market committee

5. The interest rate on the loans that the Fed makes to banks

6. 1. Oversees the finances of the federal government 2.Issues bonds to the public to finance the budget deficits of the goverment 3. Does not determine the money supply

7. An asset that can be easily & quickly converted to cash

8. Businesses that accept checking and savings deposits and use a portion of them to extend loans and make investments. Banks - savings and loan associations - and credit unions are examples.

9. The maximum potential increase in the money supply as a ratio of the new reserves injected into the banking system. It is equal to the inverse of the required reserve ratio.

10. A government corporation that insures bank deposits

11. The currency banks hold in their vaults plus their deposits at the Federal Reserve

12. A loanable funds market in which banks seeking additional reserves borrow short-term funds (generally for seven days or less) from banks with excess reserves. The interest rate in this market is called the federal funds rate.

13. Interest earning accounts offered by brokerage firms that pool depositor;s funds and invest them in highly liquid short-term securities

14. An institution designed to oversee the banking system and regulate the quantity of money in the economy

15. An asset that is used to buy and sell goods or services

16. Buying and selling of government securities in the open market by the Fed

17. Financial institutions that accept deposits in exchange for shares that pay dividends.

18. An asset that will allow people to transfer purchasing power from one period to the next

19. Funds acquired by borrowing

20. Financial institutions that offer a wide range of services (checking - savings etc.)

21. The decion making center of the Federal Reserve

22. The item commonly used to pay for goods - services - assets & outstanding debts

23. The multiple by which an increase in reserves will increase the money supply. It is inversely related to the required reserve ratio.

24. Money that has no intrinsic value nor the backing of a commodity with intrinsic value. paper currency is an example

25. An asset that can be easily & quickly converted to purchasing power

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