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).
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.
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