| A | B |
|---|
| The President of the United States | appoints the Federal Reserve Board |
| An easy money policy | allows the money supply to grow |
| To increase the money supply, the Federal Reserve System | buys government bonds on the open market |
| If the banking system has $500 of total reserves and a reserve requirement of 25 percent, the money supply can reach a maximum of | $2,000 |
| The prime rate refers to the | lowest interest rate commercial banks normally charge their customers |
| Security used to guarantee payment of a loan is called | collateral |
| In the short run, monetizing the national debt causes | the price of credit to drop |
| High interest rates | raise the cost of borrowing |
| The Federal Reserve System is | the nation's central bank |
| Banks that belong to the Federal Reserve System | hold stock in the Fed and, therefore, own it |
| The seven-member Federal Reserve Board of Governors is appointed by | the President |
| The availability of money and the cost of credit are decided by the | Federal Open Market Committee |
| All banks are required to | maintain reserves against deposits |
| Banks became subject to strict government regulation because of the | bank failures during the Great Depression |
| Coins, currency, and deposits used to fulfill the Fed's reserve requirement are called | legal reserves |
| Foreign banks | control about 25% of the United States banking assets |
| To make a profit, a bank must | charge more for the loans it makes than it pays on deposits |
| A bank's lending ability is dependent on having | excess reserves |
| A tight money policy | restricts the growth of the money supply |
| To decrease the money supply, the Fed can | sell government bonds to securities dealers |
| A monetary standard is used | to maintain the value of a money supply |
| When it comes to modern money, all of the following apply | it is very portable, divisible, and durable |
| A moneyless society that relies on trade is an economy based on | the barter system |
| Money that has an alternative use is | commodity money |
| A dual banking system is one in which banks | can obtain their charter from either the state or the federal government |
