Chapter 16 - The Monetary System

Reserve requirements

________- regulations on the minimum amount of reserves that banks must hold against deposits.

Reserves

________- deposits that banks have received but have not loaned out.

Store of value

________- an item that people can use to transfer purchasing power from the present to the future.

Leverage

________ ratio- the ratio of assets to bank capital.

Feds

________ do not control the amount that bankers choose to lend.

Unit of discount

________- the yardstick people use to post prices and record debts.

Liquidity

________- the ease with which an asset can be converted into the economys medium of exchange.

Monetary policy

________- the setting of the money supply by policymakers in the central bank.

Feds jobs

________ are to regulate banks and ensure the health of the banking system and control the money supply.

Medium of exchange

________- an item that buyers give to sellers when they want to purchase goods and services.

Discount rate

________- The interest rate on the loans that the Fed makes to banks.

balance of reserves

The ________ in banks rely on the amount of money households choose to deposit.

sale of US government bonds

Open- market operations- the purchase and ________ by the Fed.

Reserve ratio

________- the fraction of deposits that banks hold as reserves.

Currency

________- the paper bills and coins in the hands of the public.

Central bank an institution

________ designed to oversee the banking system and regulate the quantity of money in the economy.

Federal Reserve

________ (Fed)- the central bank of the United States.

Money supply

________- the quantity of money available in the economy.

Demand deposits

________- balances in bank accounts that depositors can access on demand by writing a check.

Leverage

________- the use of borrowed money to supplement existing funds for purposes of investment.