Question

A bank has $1 million in vault cash, $5 million in short term Treasury securities and...

A bank has $1 million in vault cash, $5 million in short term Treasury securities and $20 million in deposits at a Federal Reserve Bank.

The bank’s primary reserves are:                                                                               10 pts

The bank’s secondary reserves are:                                                                            10 pts.

Identify the term or concept that fits each description.                                              35 pts

The interest rate the Fed charges banks for short term loans.

The most powerful monetary policy tool.

The most used monetary policy tool.

The interest rate banks charge each other for short term emergency loans.

When the public choosing to keep money out of circulation.

Government agency that protects depositors from bank failures (up to a limit).

It is made up of the 7 Fed Governors as well as the 5 Federal Reserve Bank

                        Presidents (Fed. Reserve Bank of NY is always represented).

Homework Answers

Answer #1

Primary reserves are deposits at the Federal Bank and the vault cash kept by the bank.

Secondary reserves in the above case are short term Treasury Bills.

Bank Rate is the interest rate that the Fed charges for short term loans

Open market operations is the most powerful monetary policy tool.

Open market operations is the most used monetary policy tool.

The rate of interest charged by one bank to another bank is called interbank rate or overnight rate.

Federal deposit insurance corporation protects depositors against bank failure.

Federal open market committee.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. The three players in the money supply process include A. Banks, depositors and the US...
1. The three players in the money supply process include A. Banks, depositors and the US Treasury B. Banks, borrowers and the Fed      C. Banks, depositors and the Fed D. Banks, depositors and borrowers 2. The monetary base consists of:      A. Currency in circulation and Federal Reserve notes      B. Currency in circulation and the US treasury’s monetary liabilities      C. Currency in circulation and reserves      D. Reserves and vault cash 3. When the Fed wants to...
1.     Bank W borrows $10 million from the Federal Reserve and lends out $8 million to...
1.     Bank W borrows $10 million from the Federal Reserve and lends out $8 million to firm X and keeps $2 million in vault cash. Firm X deposits $6 million in a checking account at Bank Y and bank Y lends out $5 million to Firm Z. Firm Z buys farm equipment with the $5 million. The farm equipment spends the $5 million money on parts, rent, labor, interest and dividends.  $4 million of the farm equipment expenditures end up in...
The interest rate charged by the central bank when it makes loans to commercial banks is...
The interest rate charged by the central bank when it makes loans to commercial banks is called the Select one: a. reserve requirement. b. prime rate c. discount rate d. open market rate. A bank is more likely to face bank runs by depositors if it Select one: a. is solvent. b. if it thoroughly evaluate risks before lending. c. keeps more of its money it reserves. d. makes risky loans to investors. A contractionary monetary policy reduces GDP by...
1. Which of the following individuals benefits from inflation? Mark, who lent his friend $1,000 and...
1. Which of the following individuals benefits from inflation? Mark, who lent his friend $1,000 and agreed to accept repayment of the same amount one year later. Ben, who borrowed $1,000 from a friend (Mark?) and agreed to pay the same amount one year later. Randall, who lives on a fixed income of $800 per month. Asuza, who keeps her savings in the form of cash in a safe at home 2. The monetary policy tool that involves the buying...
The FOMC has instructed the FRBNY Trading Desk to purchase $360 million in U.S. Treasury securities....
The FOMC has instructed the FRBNY Trading Desk to purchase $360 million in U.S. Treasury securities. The Federal Reserve has currently set the reserve requirement at 6 percent of transaction deposits. Assume U.S. banks withdraw all excess reserves and give out loans. a. Assume also that borrowers eventually return all of these funds to their banks in the form of transaction deposits. What is the full effect of this purchase on bank deposits and the money supply? b. What is...
The FOMC has instructed the FRBNY Trading Desk to purchase $770 million in U.S. Treasury securities....
The FOMC has instructed the FRBNY Trading Desk to purchase $770 million in U.S. Treasury securities. The Federal Reserve has currently set the reserve requirement at 10 percent of transaction deposits. Assume U.S. banks withdraw all excess reserves and give out loans. a. Assume also that borrowers eventually return all of these funds to their banks in the form of transaction deposits. What is the full effect of this purchase on bank deposits and the money supply? b. What is...
Suppose the Bank of Canada buys $5 million worth of government securities from CBA, a commercial...
Suppose the Bank of Canada buys $5 million worth of government securities from CBA, a commercial bank. a) Using T-account analysis, show what happens to the balance sheets of the BoC and CBA immediately. b) If CBA does not want to hold any excess reserves, it will make more loans. Show the change for its balance sheet reflecting this lending. c) Using T-account analysis, show what happens to the balance sheet of the CBA when the borrower withdraws cash from...
1. The most commonly used tool of monetary policy in the U.S. is the reserve requirement...
1. The most commonly used tool of monetary policy in the U.S. is the reserve requirement commercial banks must keep on hand at the Fed. TRUE/FALSE? 2. Open market operations take place when the central bank sells or buys U.S. Treasury bonds in order to influence the quantity of bank reserves and the level of interest rates. The specific interest rate targeted in open market operations is the discount rate.  TRUE/FALSE? 3. The Federal Reserve System is run by the government,...
The FOMC has instructed the FBRNY Trading Desk to purchase $480 million in US Treasury securities....
The FOMC has instructed the FBRNY Trading Desk to purchase $480 million in US Treasury securities. The Federal Reserve has currently set the reserve requirement at 6 percent of transaction deposits. Assume US banks withdraw all excess reserves and give out loans. A. Assume that borrowers eventually return all of these funds to their banks in the form of transaction deposits. What is the full effect of this purchase on bank deposits and the money supply? ___ in bank deposits...
Select the correct answer: A (unit of account; store of value) is any commodity or token...
Select the correct answer: A (unit of account; store of value) is any commodity or token that can be held and exchanged later for goods and services. The Fed’s main policy-making committee is the (Board of Governors; Federal Open Market Committee). The Fed sets the minimum percentage of deposits that must be held as reserves, which is called the (discount rate; required reserve ratio). The currency in a bank’s vault is part of the bank’s (reserves; loans). The interest rate...