Podcast
Questions and Answers
What is the primary purpose of reserve requirements for depository institutions?
What is the primary purpose of reserve requirements for depository institutions?
- To increase the amount of loans made to the public
- To reduce the overall money supply in the economy
- To ensure depository institutions hold a certain amount of vault cash and reserves (correct)
- To provide a source of funds for borrowing institutions
What happens to the total reserves of depository institutions when the Fed grants loans from the discount window?
What happens to the total reserves of depository institutions when the Fed grants loans from the discount window?
- They decrease by the amount of the loan
- They increase by the amount of the loan (correct)
- They remain unchanged
- They decrease by half the amount of the loan
What is the effect of increasing reserve requirements on the economy?
What is the effect of increasing reserve requirements on the economy?
- It has a multiplicative effect on the economy, reducing the total amount of loans made (correct)
- It has no effect on the economy
- It leads to an increase in the money supply
- It has a direct and positive effect on economic growth
What is the primary credit rate set at, relative to the federal funds rate?
What is the primary credit rate set at, relative to the federal funds rate?
What was the recent change made to the discount window by the Federal Reserve?
What was the recent change made to the discount window by the Federal Reserve?
What is the purpose of the primary credit loan type?
What is the purpose of the primary credit loan type?
What is the purpose of reserve requirements in the banking system?
What is the purpose of reserve requirements in the banking system?
What happens when central banks raise reserve requirements?
What happens when central banks raise reserve requirements?
Why do central banks rarely change reserve requirements?
Why do central banks rarely change reserve requirements?
What is the primary source of funding for the central bank?
What is the primary source of funding for the central bank?
What is the effect of lowering reserve requirements on interest rates?
What is the effect of lowering reserve requirements on interest rates?
What happens to the money available for new loans when reserve requirements are raised?
What happens to the money available for new loans when reserve requirements are raised?
What is the primary function of the Discount Window in each Federal Reserve Bank?
What is the primary function of the Discount Window in each Federal Reserve Bank?
What happens to the total reserves when the Fed loans $200 million in reserves from the discount window?
What happens to the total reserves when the Fed loans $200 million in reserves from the discount window?
What is the rate charged on loans from the Fed to depository institutions called?
What is the rate charged on loans from the Fed to depository institutions called?
What is the purpose of reserve requirements?
What is the purpose of reserve requirements?
What happens to loans and deposits when the Fed loans $200 million in reserves from the discount window?
What happens to loans and deposits when the Fed loans $200 million in reserves from the discount window?
Why do central banks, like the Federal Reserve, use changes in reserve requirements as a monetary policy tool?
Why do central banks, like the Federal Reserve, use changes in reserve requirements as a monetary policy tool?
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