The fed uses the target federal funds rate as a

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Chapter 24 / Exercise 35
Exploring Economics
Sexton
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23.The Fed uses the target federal funds rate as a primary tool of monetary policy compared to reserve requirements.
PTS:124.The target federal funds rate is set by the supply and demand for commercial bank reserves.
PTS:1
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Chapter 24 / Exercise 35
Exploring Economics
Sexton
Expert Verified
MULTIPLE CHOICE1.Withdrawing cash from a checking account does not decrease
PTS:12.Excess reserves are affected by1.reserve requirements2.the repayment of existing bank loans3.cash withdrawals
PTS:13.When commercial banks grant loans,a.the money supply is reducedb.the money supply is increasedc.total reserves increased.total reserves decreaseANS: B
PTS:14.If deposits are withdrawn from a commercial bank, it may obtain reserves by
PTS:15.When a commercial bank receives a cash deposit,1.its required reserves increase2.its required reserves decrease3.its total reserves increase4.its total reserves decrease
PTS:16.Commercial banks lend excess reserves for one day in the
PTS:17.The Federal Reserve increases reserves bya.selling securitiesb.buying securitiesc.raising reserve requirementsd.raising the discount rateANS: B
PTS:18.The Federal Reserve
PTS:19.By lowering the discount rate, the Federal Reserve
PTS:110.The purpose of the Federal Reserve is to
PTS:111.The structure of the Federal Reserve includes1.all commercial banks2.the twelve district banks3.the Board of Governorsa.1 and 2b.1 and 3c.2 and 3d.1, 2, and 3ANS: C
PTS:1

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