Economics Chapter 12 Questions – The Federal Reserve System and Monetary Policy

In complete sentences, answer the following questions. 2 points each, except for number 14.

Section 1 - The Federal Reserve System

  1. Describe the regional structure of the Federal Bank (The Fed).
  2. What is a very unique feature regarding ownership of the Fed?
  3. How is the Fed structure of the Fed organized?
  4. Name and describe (briefly but completely) the key responsibilities of the Fed.

    5. READ the section on Alan Greenspan. Why has this man become so important to America? What kind of social clout do his Senate testimonies carry?

    Section 2 – Monetary Policy

  5. How do fractional reserve systems work?
  6. Describe how a bank really works.
  7. How do you know when a bank has become mature (or its assets)?
  8. Explain (in theory and practice) how the fractional reserves work and their equation when dealing with total reserves.
  9. Briefly describe the three major and two minor tools of monetary policy the Fed can use.

    10. Section 3 – Monetary Policy, Banking, and the Economy

  10. What impacts can be felt by consumers when the Fed increases or decreases the interest rate or cost of credit?
  11. What can be done to stabilize the economy over long periods of time?
  12. Name and describe a few issues the Fed must contend with when determining monetary policy.
  13. Provide a few reasons why banks may fail?
  14. If you were Greenspan, what recommendations would you make to the government concerning improving the banking system. THIS QUESTION IS WORTH 5 POINTS