Term
| What is the minimum reserver ratio for checkable deposits in the US? |
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Definition
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Term
| What are the 3 main Bank Regulations? |
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Definition
| Deposit Insurance, Capital requirements, and reserve requirements. |
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Term
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Definition
| is an arrangement in which the deferal reserce stands ready to lend money to the banks in trouble. |
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Term
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Definition
| a phenomenon in which many of a bank;s depositors try to withdraw their funds due to fears of a bank failure. |
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Term
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Definition
| the fraction of bank deposits that a bank holds as reserves. |
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Term
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Definition
| the sum of currency in circulation and bank reserves |
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Term
| Federal reserve system consists of what 2 parts? |
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Definition
| the Board of Governors and 12 regianal federal reserve banks. |
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Term
| who selects the board of governors? |
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Definition
| The President selects them and the Senate approves. They are appointed to 14 year terms |
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Term
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Definition
| an institution that oversees and regulates the banking system and controls the monetary base. |
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Term
| what are the feds three main policy tools? |
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Definition
| reserve requirements, the discount rate, and most importantly, open-market operations |
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Term
| what does a bank do if it looks as if it has insufficient reserves to meet the Fed's reserve requirement? |
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Definition
| It normally borrows additional reserves from other banks via the federal funds market. |
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Term
| what is the federal funds market? |
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Definition
| a financial market that allows banks that fall short of the reserve requirement to borrow reserves 9usually just overnight) from banks that are holding excess reserves. |
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Term
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Definition
| the rate of interest the fed charges on those loans. normally set 1% point above the federal funds rate in order to discourage banks from turning to the fed when they are in need of reserves. |
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Term
| in open market operations.. |
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Definition
| the federal reserve buys or sells U.S. treasurey bills, normally through a transaction with commercial banks. (banks that mainly make buisness loans as opposed to home loans. |
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Term
| what are the two categories of banks? |
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Definition
| Commercial and investment |
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Term
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Definition
| the relationship between the interest rate and the quantity of money demanded by the public. The demand curve slopes downward because other things equal a higher interest rate increases the opportunity cost of holding money, leading the public to reduce the quantity of money it demands. |
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