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Money and the FED
| Question | Answer |
|---|---|
| the market for loans | loanable funds market |
| a bank's checking account with the FED | reserve account |
| an arrangement in which banks hold only a fraction of their deposits and lend out the remainder | fractional reserve bankinf |
| total supply of money in circulation, composed of currency, checking accounts and traveler's checks | M1 or money supply |
| the costs associated with the time and effort needed to search out, negotiate and consummate a change | transaction costs |
| minimum amount of reserves a bank must hold against deposits as mandated by the FED | required reserves |
| something with the ability to hold value over time | store of value |
| the buying and selling of government securities by the FED | open market operations |
| the central banking authority of the United States | The Federal Reserve System |
| the 12 member policy making group within the FED | Federal Open Market Committee |
| common measurement used to express values | unit of account |
| the sum of a bank's deposits in its reserve account at the Fed and its vault cash | total reserves |
| the regulation that requires a bank to keep a certain percentage of its deposits in its reserve accounts | reserve requirement |
| an interest earning account | savings account |
| an account from which deposited funds can be withdrawn in currency or transferred by a check to a third party at the initiative of the owner | demand deposit |
| interest rate one bank charges another for a loan | federal funds rate |
| governing body of the FED | Board of governors |
| any reserves held beyond the required amount | excess reserves |
| interest rate the Fed charges a bank for a loan | discount rate |