16 1 Quiz Worksheet The Federal Reserve System

16 -1 Quiz Worksheet The Federal Reserve System

The Federal Reserve • Our “national bank” functions as the bankers’ bank. • The national government stores our tax money here. • When the Treasury is empty of tax money, this is where the national government goes to borrow money to continue spending.

Monetary Policy • Actions the Federal Reserve takes to influence the economy.

Board of Governors • A seven-member committee that oversees the entire system

Federal Reserve Districts • Twelve districts were created by the Federal Reserve Act of 1916.

Federal Open Market Committee • Makes key economic decisions about interest rates and the money supply.

Reserve Requirements • Amount of money a bank is required to keep on hand in their vaults at all times.

Federal Reserve Act of 1913 • Passed by Congress to established the Federal Reserve System

Independent from the National Government • Because the system is actually owned by the member banks, the Fed has a high degree of political independence.

Nationally Chartered Banks • All nationally charted banks MUST be part of the federal reserve system. • That’s what makes them a “national” bank. • They will have the word “national” in their name or the initials “N. A. ”, meaning “nationally affiliated”.

Purpose of the Act • Congress wanted to foster business growth and give banks a source of emergency cash.

Why Didn’t We Have a Central Bank? • Back in the 1830’s, Andrew Jackson and other people feared that a central bank would increase federal power too much. • The USA had no bank like the Fed from the 1830’s until 1913. • Andrew Jackson is honored for his principles by having his portrait on the $20 bill.