Exam (elaborations)
ECN-460 Final Questions And Answers Latest Update
- Course
- ECN 460
- Institution
- Arizona State University
ECN-460 Final Questions And Answers Latest Update
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Solution 2024/2025Pepper
ECN-460 Final Questions And Answers Latest
Update
Board of Governors duties ANS✔✔ Set reserve requirements, set IOR,
determines discount rate
12 Reserve Bank duties ANS✔✔ Establish discount rate, vote on OMO, issue
new currency
FOMC duties ANS✔✔ Set FFR through OMO, advise on discount, IOR, and
Reserve Requirements
Why is the Feds independence important? ANS✔✔ Policy not subject to the
political business cycle (ex. president nixon using expansionary policy just
before an election)
When is a Fed governor appointed? ANS✔✔ Every 14 years
How is the chairman appointed? ANS✔✔ Chosend from governors, serves 4
year term
What does the FOMC include? ANS✔✔ 7 board if governors + 5 FRB
Presidents
Who is required to follow reserve requirements? ANS✔✔ All banks
, Solution 2024/2025
Pepper
Quasipublic Nature ANS✔✔ Owned by private commercial banks in
respective disticts
Beige Book ANS✔✔ a Federal Reserve System publication about current
economic conditions across the 12 Federal Reserve Districts
Advantages of OMO ANS✔✔ Fed has control, flexible and precise, easily
reversed
If the FR wants to raise reserves they conduct ANS✔✔ OMP
If the proceeds are kept in currency, an OMP has ANS✔✔ no effect
Float ANS✔✔ Temporary increase in reserves because of fed's check-
clearing process
Money Supply Factors: After an increase in Nonborrowed monetary base,
the money supply ANS✔✔ increases
Money Supply Factors: After an increase in Required Reserve Ratio, the
money supply ANS✔✔ decreases
Money Supply Factors: After an increase in Borrowed reserves, the money
supply ANS✔✔ increases
Money Supply Factors: After an increase in excess reserves, the money
supply ANS✔✔ decreases
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