16-1
What consists of one representative from each of the 12 district banks?
Federal Advisory Council
What is the lowest rate of interest commercial banks charge their best customers?
prime rate
What are policies that do not require new or special legislative action to go into effect?
passive fiscal policies
What is the paper and coin part of the money supply?
currency
Who are firms that own & control one or more banks?
bank holding companies
Who is the Fed's primary monetary policy-making body? It has 12 voting members and the decisions they make impact the cost and availability of credit
Federal Open Market Committee (FOMC)
What are coins & currency that banks hold in their vaults, plus deposits at the Fed?
legal reserves
How much did Real GDP decline during the great recession of 2008-2009?
4.5%
What is the buying and selling of government securities in financial market?
open market operations
What is the hypothesis that the supply of money directly affects the price level over the long run?
quantity theory of money
What is a commercial bank that is a member of, and holds shares of stock in, the Fed?
member banks
What is the percentage of every deposit that must be set aside as legal reserves?
reserve requirement
What is the three-member group that devises strategies and advises the President of the United States on economic matters?
council of economic advisers
What changes in the money supply that affect the availability and cost of credit?
monetary policy
What type of money policy is when the Fed restricts the size of the money supply?
What seven-member group is the Fed led by? They are appointed by the president and approved by the senate.
Board of Governors
What is the philosophy that places primary importance on the role of money in the economy?
monetarism
What is the technique used by the Federal Reserve to keep interest rates low and encourage banks to take on more loans to stimulate the economy?
Quantitative Easing (QE)
What is the interest the Fed charges on loans to financial institutions?
discount rate
Who processes the billions of checks that are written each year?
Clearinghouses
The Board of Governors help make policies that affect the level of ______________ rates and the general availability of _______________?
interest rates
availability of credit
What type of money policy is when the Fed expands the money supply, causing interest rates to fall?
easy money policy
What was ONE of the THREE reasons for a decrease in the popularity of fiscal policy?
1. Lags
2. Gridlock
3. Ideology
What are regulations that make it illegal for businesses to give workers raises or to raise prices without the explicit permission of the government?
wage-price control
The Federal Open Market Committee (FOMC) has the power to do what that greatly impacts the economy?
raise & lower interest rates