1. Determine whether the following are functions of the Federal Reserve.

a. Act as a banker's bank, clear checks, and provide deposit services for banks: (Not a function of the Federal Reserve / Function of the Federal Reserve )

b. Changing tax rates in the economy to stabilize business cycles: (Not a function of the Federal Reserve / Function of the Federal Reserve )

c. Increasing government expenditures on infrastructure, such as new bridges and schools: (Not a function of the Federal Reserve / Function of the Federal Reserve )

d. Supervise and regulate member banks in order to protect consumers: (Not a function of the Federal Reserve / Function of the Federal Reserve )

e. Using open market operations to target the supply of money: (Not a function of the Federal Reserve / Function of the Federal Reserve )

f. Provide banking services to larger corporations: (Not a function of the Federal Reserve / Function of the Federal Reserve )

2.

a. ABC Bank has $390,000 of checkable deposits. If the Federal Reserve has a reserve requirement of 14 percent, what is the required reserves?

b. XYZ Bank has required reserves of $3,960 and excess reserves of $194,040, what is the amount of actual reserves?

3. Suppose the Federal Reserve establishes a reserve requirement of 6 percent.

Instructions: Round answers two decimal places.

a. What is the monetary multiplier?

b. Using the money multiplier from part a, how much will the money supply change if checkable deposits increase by $300 million?

Answer rating: 100% (QA)

3 Fed a has 1 Controlling money supply 2 Supplying paper money 3 Providing chec... View the full answer