In the banking system of the United States, banks that wish to borrow to make up reserve deficiencies must turn to the federal funds market.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2The market in which banks make loans of reserves for terms of over one year is called the federal funds market.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3Banks that wish to borrow required reserves can turn to the federal funds market.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4An increase in the discount rate by the Federal Reserve causes the money stock to expand.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 5A lower discount rate discourages banks from borrowing reserves and making loans. Therefore, if the Fed wants to expand the money supply, it raises the discount rate.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6A decrease in the discount rate by the Federal Reserve causes the money stock to expand.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 7An open-market purchase by the Federal Reserve withdraws excess reserves from the banking system and causes the money supply to contract.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 8An open-market purchase by the Federal Reserve injects excess reserves into the banking system and allows the money supply to expand.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 9Most of the Fed's assets are held in the form of loans to its member banks.
a. True
b. False
Indicate whether the statement is true or false
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