The Central Bank Balance Sheet and the Money Supply Process

It supplies currency, provides deposit accounts to the government and commercial banks, makes loans, and buys and sells securities and foreign currency.

Refer to the money a company or individual keeps on hand to meet short-term and emergency funding needs.

The primary assets of most central banks

The loans the Fed makes when commercial banks need short-term cash.

Are the central bank’s and government’s balances of foreign currency. These are held in the form of bonds issued by foreign governments.

Two types of reserves

The increase in commercial bank deposits following a one-dollar open market purchase

The government agency that oversees the banking system and is responsible for the conduct ofmonetary policy in the United States is

Individuals that lend funds to a bank by opening a checking account are called

Both ________ and ________ are Federal Reserve assets

The required reserve ratio of 10%, and demand deposits of $20,000, The required reserves would be 10% x $20,000

The Federal Reserve determined the reserve ratio to be 11%. This means if a bank has deposits of $1 billion, it is required to have ____ ($1 billion x .11 = ?).