Chapter 16 Assessment

Chapter 16 Assessment - increases. 10. My conclusion is...

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Chapter 16 Assessment 1. The duties are to hold reserves, assure stability, and lend money. 2. The FOMC is a board of the Fed that supervises the sale and purchase of federal government securities. 3. The functions are paying government bills, selling government securities, and distributing currency. 4. The RRR is the fraction of the bank’s deposits that must be kept in reserve by the bank, to control the amount a bank can loan. 5. Open market operations is the Fed’s most frequently used monetary policy tool. 6. Monetary policy includes the Fed’s actions that change the money supply in order to influence the economy. 7. Wage and price controls can be used. 8. The actions and even more specific directions with the economy should be related in order to plan a batter economy for the future. 9. As the prime rate decreases, the FFR decreases and as it increases, the FFR
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Unformatted text preview: increases. 10. My conclusion is that the economy is getting sluggish and is now in a recession. 11. This shows why the Fed was created but how ineffective it is currently in leading the economy in a better direction. 12. This illustrates that the separation of powers isnt always necessarily good because it creates policy lag and even gridlock. 13. The First Nationals reserves will increase while the FFR increases as it is related. 14. They were in conflict in January 2006 when the Fed raised the FFR target. 15. I believe that the FOMC maintained or lowered the target for the FFR. I believe this because they are using examples of low inflation and elevated energy prices....
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