Question

QUESTION 1

Commercial bank reserves held at a Federal Reserve Bank are a liability of the commercial bank and an asset of the Federal Reserve.

True

False

QUESTION 2

During normal economic times, the Federal Reserve has primarily influenced overall financial conditions by adjusting the federal funds rate. The Fed Funds rate is the rate the U.S. Government charges banks for short term credit.

True

False

QUESTION 3

Everything else held constant, a decrease in holdings of excess reserves will mean

		a decrease in checkable deposits.
		an increase in the money supply.
		an increase in discount loans.
		a decrease in the money supply.

QUESTION 4

Federal Reserve Notes are assets of the Federal Reserve System.

True

False

QUESTION 5

Following its meeting in January 2012, the FOMC issued a statement regarding its longer-run goals and monetary policy strategy. The FOMC noted in its statement that the Committee judges that inflation at the rate of 0% percent (as measured by the annual change in the price index for personal consumption expenditures, or PCE) is most consistent over the longer run with the Federal Reserve's statutory mandate.

True

False

Answer 1

1. The given statement is False because commercial Bank reserves held at a federal reserve Bank is an asset to the commercial Bank because these funds are cash belonging to them and these funds are the claim the commercial banks have against the FED. But these funds are liabilities to the federal reserve because they owe these funds to the commercial banks.

Answer: False