FINA 3317 - Chapter 4 | Questions with 100% Verified Answers |
Latest Update 2026/2027
Question: The primary policy tool used by the Fed to meet its monetary policy goals is:
Answer: open market operations.
Question: The Federal Reserve System is charged with:
Answer: conducting monetary policy and providing payment and other services to a variety of institutions.
Question: The _______________ is a nationwide network jointly operated by the Fed and private institutions that
electronically process credit and debit transfers of funds.
Answer: ACH
Question: The _____________ is a network linking over 5,300 banks with the Federal Reserve that is used to
transfer deposits and make loan payments between participants.
Answer: Fedwire
Question: All else held constant, if the Fed was targeting the quantity of money supplied and money demand
dropped, the Fed would likely ______________. If the Fed was instead targeting interest rates and money demand
dropped, the Fed would likely _______________.
Answer: do nothing; decrease the money supply
Question: Which of the following is the major monetary policy-making body of the U.S. Federal Reserve
System?
Answer: FOMC
Question: The major liability of the Federal Reserve is:
Answer: currency outside banks.
Question: The major asset of the Federal Reserve is:
Answer: U.S. Treasury securities.
Question: The Fed funds rate is the rate that:
Answer: banks charge each other on loans of excess reserves.
Question: The discount rate is the rate that:
Answer: the Federal Reserve charges on loans to commercial banks.
Question: The Fed offers three types of discount window loans. ______________ credit is offered to small
institutions with demonstrable patterns of financing needs, _____________ credit is offered for short-term
temporary funds outflows, and _____________ credit may be offered at a higher rate to troubled institutions with
more severe liquidity problems.
Answer: Seasonal; primary; secondary
Question: Before 2003 the discount window loan rate was set:
Answer: below the target Fed funds rate.
Latest Update 2026/2027
Question: The primary policy tool used by the Fed to meet its monetary policy goals is:
Answer: open market operations.
Question: The Federal Reserve System is charged with:
Answer: conducting monetary policy and providing payment and other services to a variety of institutions.
Question: The _______________ is a nationwide network jointly operated by the Fed and private institutions that
electronically process credit and debit transfers of funds.
Answer: ACH
Question: The _____________ is a network linking over 5,300 banks with the Federal Reserve that is used to
transfer deposits and make loan payments between participants.
Answer: Fedwire
Question: All else held constant, if the Fed was targeting the quantity of money supplied and money demand
dropped, the Fed would likely ______________. If the Fed was instead targeting interest rates and money demand
dropped, the Fed would likely _______________.
Answer: do nothing; decrease the money supply
Question: Which of the following is the major monetary policy-making body of the U.S. Federal Reserve
System?
Answer: FOMC
Question: The major liability of the Federal Reserve is:
Answer: currency outside banks.
Question: The major asset of the Federal Reserve is:
Answer: U.S. Treasury securities.
Question: The Fed funds rate is the rate that:
Answer: banks charge each other on loans of excess reserves.
Question: The discount rate is the rate that:
Answer: the Federal Reserve charges on loans to commercial banks.
Question: The Fed offers three types of discount window loans. ______________ credit is offered to small
institutions with demonstrable patterns of financing needs, _____________ credit is offered for short-term
temporary funds outflows, and _____________ credit may be offered at a higher rate to troubled institutions with
more severe liquidity problems.
Answer: Seasonal; primary; secondary
Question: Before 2003 the discount window loan rate was set:
Answer: below the target Fed funds rate.
