Why does the Fed act as a lender of last resort? What is the usual mechanism by which the Fed acts as a lender of last resort to depository institutions?
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- Why does the Fed act as a lender of last resort? What is the usual mechanism by which the Fed acts as a lender of last resort to depository institutions?
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- Explain two reasons why the Reserve Bank does not have complete control over the level of bank deposits and loans.After reviewing and understanding the functions of the Federal Reserve, would you agree that many countries have a very similar setup to control their money supply? How are the Bank of Japan, Bank of England, and US Federal Reserve similar? How much of an impact does the housing industry have on the overall economy in the United States? How many different businesses are involved in furnishing a home?Explain the role of the banking system in the effective implementation of the monetary policy
- How does the Federal reserve Bank "influence" interest rates to meet the objectives of the Fed?Q.15. The Federal Reserve System is the central bank of the United States, and institution established by the Federal Reserve Act of 1913, the parameters of which can be amended by Congress. As a central bank, the key functions of the Fed are to: To conduct monetary policy, support financial system stability and provide banking services to banks and the federal government To conduct fiscal and monetary policy To advise the President and Congress on economic policy 4. To managing and monitoring the money supply. select one and explainA bank has the following deposits and assets: Checkable deposits held by individuals and businesses, $380 Savings deposits held by individuals and businesses, $1,280 Small time deposits, $575 Loans to businesses, $1,809 Outstanding credit card balances, $300 Government securities, $125 Currency in the bank's vault, $1 Reserve account at the Fed, $8 Calculate the bank's total deposits, deposits that are part of M1, and deposits that are part of M2. The bank's total deposits are $ Deposits that are part of M1 are $ Deposits that are part of M2 are $
- Which of the following is the role of the Federal Reserve System? Select one: a. Set the Required Reserve Ratio for Bank of America b. Manage the account for South Carolina and other state governments c. Make loans to local businesses d. Print new money e. All of these are roles of the FedHow can banks compute and quote a forward rate to their customers?Currently, the Fed does not have complete control of the money supply because the Congress and the Treasury can also make changes to the money supply. government bonds may not be available for purchase when the Fed wants to perform OMO. the Fed does not know where all the U.S. currency is located. the amount of money in the real economy depends on the behavior of depositors and bankers. All of the above are correct.
- An institution that oversees the banking system and regulates the money supply is known as central bank treasury congress the securities and exchange commissionThe banking system has $5,000 in reserve, $45,000 in loans, and $50,000 in deposits. Currently the reserve requirement is 10%. If the Fed lowers reserve requirement to 5%, the banking system converts 75% excess reserves to loans, but borrowers return only 60% of these funds to the banking system as deposits. What is the maximum amount of loans the banking system could make?4. Working through an open-market operation Assume that the following balance sheet portrays the state of the banking system. The banks currently have no excess reserves. Assets Liabilities and Net Worth (Billions of Dollars) Total reserves Checkable deposits 50 Loans 25 Securities 20 Total 50 Total 50
