The Federal Reserve System A. The History and Structure of the Fed ...

Name _________________________ Class _______________ Date _______________
CHAPTER
16
CHAPTER OUTLINE
The Federal Reserve and Monetary Policy 2
Directions: Fill in the outline below. Filling in the blanks will help
you as you read and study Chapter 16.
I. Section 1: The Federal Reserve System
A. The History and Structure of the Fed
1. The __________________ __________________
__________________ of 1913 created the Federal
Reserve System.
2. There are __________________ district banks in the Federal
Reserve System. The Fed’s decisions about money and
banking are known as __________________ __________________.
II. Section 2: Federal Reserve Functions
A. Services of the Fed
1. The Fed handles the __________________ Department’s
“__________________ account,” buys and sells government
__________________ , and issues the nation’s __________________.
2. The Fed manages the flow of money through
its __________________ __________________ service.
The Fed also provides __________________ to banks at
the __________________ rate.
3. Banks that hold deposits must report their __________________
and activities to the Fed on a __________________ basis.
B. How the Fed Regulates the Money Supply
1. The Fed acts as the nation’s money __________________ by
trying to figure out the likely __________________ for money.
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96

Name _________________________ Class _______________ Date _______________
CHAPTER OUTLINE (continued)
The Federal Reserve and Monetary Policy 2
III. Section 3: Monetary Policy Tools
A. Money Creation
1. The __________________ __________________ formula
shows how much new money can be created from a
bank deposit.
B. Tools of Monetary Policy
1. The Fed might __________________ reserve requirements
if there was inflation and __________________ them if
unemployment is high.
2. __________________ the discount rate encourages banks
to borrow more money and then __________________ it
to their own customers.
3. When the Federal Open Market Committee buys government
__________________ , it __________________ the money supply.
IV. Section 4: Monetary Policy and Macroeconomic Stabilization
A. How Monetary Policy Works
1. When interest rates are low, investment spending __________________.
2. The Fed follows an __________________ money policy to
speed up the economy and a __________________ money
policy to slow it down.
3. There is a longer __________________ lag for monetary
policy and a longer __________________ lag for fiscal policy.
B. Two Approaches to Monetary Policy
1. An __________________ policy encourages action.
2. __________________ __________________ economists believe
the economy will self-correct.
Copyright © by Pearson Education, Inc., or its affiliates. All rights reserved.
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