Banks
There are … members of the FED
7
Name 1 monetary tool used by the FED
-Open market operations
-Reserve Requirements
-Discount rate
Debt is…
Borrowing something to use now, usually money, that must be repaid in the future, often with interest
What does the FED do?
-Conducts monetary policy
-Promotes stability of the financial system
-Monitors financial institutions
-Payment settlement system
-Consumer protection
Economic activity slows down when…
-Government bonds are sold
-Reserve requirements are raised
-Discount rates are raised
Interest is…
The cost of borrowing money typically expressed as a percentage of the amount borrowed charged by lenders to compensate for the risk of non-repayment.
The Federal Reserve Act of…
1913
Banks will drop interest rates in order to…
Influence people to take out loans
Examples of good debt are…
-Education
-Mortgage
-Small business loan
Banks act as financial intermediaries because they…
Stand between savers and borrowers
What action is taken when discount rates are used and decrease money supply?
Raised discount rates
Examples of bad debt are…
-Credit
-Car
-Unnecessary purchases
How many Federal Reserve Banks are there in the U.S.?
12
Reserve requirements include…
-Selling government bonds
-Raising reserve requirements
-Lowering reserve requirements
Transition rates get significantly higher when…
A borrower is already late on payments.