Question 1

What is the FOMC? Who are the members of the FOMC? What policy does the FOMC decide?

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Question 2

What factors affect the demand for money?

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Question 3

ʺBecause monetary policy must be approved by the president of the United States, the president is chair of the Federal Open Market Committee.ʺ Analyze the previous statement is it correct or incorrect?

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Question 4

Describe how actual reserves are calculated and explain the difference between desired reserves and excess reserves. How do reserves affect the amount of loans a bank can make?

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Question 5

When the Fed buys securities from a bank, what happens to the monetary base and the quantity of money? Which changes by more or do both change by the same amount?

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Question 6

The president of which Federal Reserve bank is always a voting member of the FOMC?

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Question 7

ʺWhen the Fed buys securities from a bank, the quantity of money eventually decreases by a fraction of the initial change in the monetary base.ʺ Is the previous statement correct or incorrect? Explain your answer.

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Question 8

Are the members of the Board of Governors of the Federal Reserve System elected officials?

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Question 9

ʺA bank can only use its excess reserves to make loans, while required reserves can only be used to buy U.S. government securities.ʺ Explain whether the previous statement is correct or incorrect.

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Question 10

Does the Federal Reserve conduct both the nationʹs monetary policy and its fiscal policy?

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Question 11

What is the discount rate?

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Question 12

What is the structure of the Federal Reserve Bank System?

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Question 13

If the Fed sells $100 million of U.S. government securities, what happens to the quantity of money?

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Question 14

How are the nominal and real demands for money related to changes in the price level?

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Question 15

Explain the process by which the banking system creates money.

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Question 16

Briefly describe the Federal Reserve System, how it is governed, and its roles in the economy.

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Question 17

List and discuss the four economic functions that depository institutions provide their customers.

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Question 18

List the Fedʹs main policy tools and briefly explain each one.

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Question 19

How do banks create liquidity?

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Question 20

What is the interaction between the Federal Reserve districts and the Board of Governors of the Federal Reserve System?

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Quiz 8: Money, the Price Level, and Inflation