Chapter 26 Post Quiz
Central Banking and Monetary Policy

Matching Questions:

Match the terms on the left with the definition in the column on the right. Enter the lowercase letter of that definition in the box to the left of the question number.

	1. Federal Reserve System	a. an objective of the Federal Reserve.
	2. Federal Open Market Committee	b. will decrease the interest rate, increase GDP, and increase the price level.
	3. Price stability	c. involves setting the interest rate at which commercial banks and other depository institutions can borrow reserves from one of the Federal Reserve banks.
	4. Open-market operations	d. consists of 12 regional Federal Reserve Banks.
	5. Discount-rate policy	e. unlikely to be changed by the Fed as part of any monetary policy decision.
	6. Federal funds rates	f. what the Fed primarily sets short-term targets for.
	7. Discount rate	g. includes the seven Federal Reserve governors and all the presidents of the regional Federal Reserve banks, but only 5 presidents vote at any one time.
	8. Required reserve ratio	h. the interest rate charged by the Federal Reserve when a bank borrows from one of the 12 regional banks.
	9. Monetary transmission mechanism	i. will determine the interest rate.
	10. Supply and demand of money	j. the buying or selling of U.S. government securities in the open market in order to influence the level of bank reserves.
	11. Increase in the money supply	k. the route by which changes in the supply of money are translated into changes in output, employment, prices, and inflation.
	12. Demand-for-money curve	l. represents the public's desire to hold money.