Study Guide - Mishkin - Chapter 15

Definitions

Dual Banking System
FOMC
Board of Governors
Federal funds market
Federal funds rate
Discount rate
Required reserves
Excess reserves
Political business cycle

Essay Questions

1. The central bank of the U.S. unique compared to the rest of the world. Explain the two major unique features of the FRS and discuss the historical reasons that made the FRS unique.
2. Explain the special role of the NY Federal Reserve Bank.
3. Explain the three tools of monetary policy.
4. The discount rate is almost always lower than the Fed Funds rate. Why do banks prefer the federal funds market to discount borrowing?
5. Discuss the issue of central bank independence, and present the case for and against central bank independence.
6. (T-F-U, explain) The optimal amount of excess reserves is zero.
7. Explain the differences between class A, B and C directors for FRS district banks.