Recall the Application About How the Fed Kept the U

question 100

Multiple Choice

Recall the Application about how the Fed kept the U.S. financial system in operation following the attacks of September 11, 2001, to answer the following question(s) . To help prevent financial firms from defaulting on their debts, the Fed took several steps to provide additional funds to the financial system, including allowing banks to borrow more, increasing the difference between the credits and debits it extended while serving as a clearinghouse for checks, purchasing government securities, and providing dollars to foreign central banks. Together, these actions increased the credit extended by the Fed by over $90 billion.
-According to this Application, following the attacks of September 11, 2001, the Fed effectively put an additional $20 billion into the banking system by increasing the difference between the credits and debits it extended while serving as a clearinghouse for checks. The difference between the credits and debits extended by the Federal Reserve is called the

• A) Federal Reserve balance sheet.
• B) federal funds rate.
• C) Federal Reserve float.
• D) federal deficit.

---

Definitions:

Equipment Costing

The process of tracking and analyzing the costs associated with the purchase and maintenance of equipment.

Cash Equivalent

Short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

Maturity Date

The specified date on which the principal amount of a bond or other financial instrument is due to be repaid.

Interest Rate Changes

Variations in the cost of borrowing or the return on savings that occur due to economic policy or market conditions.