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Explain Two Reasons Why the Fed Does Not Have Complete

question 46

Essay

Explain two reasons why the Fed does not have complete control over the level of bank deposits and loans. Explain how a change in either factor affects the deposit expansion process.


Definitions:

Marketable Securities

Liquid financial instruments that can be quickly converted into cash at a reasonable price, such as stocks and bonds.

Days' Sales in Receivables

A financial ratio that measures the average number of days it takes a company to collect payment after a sale has been made.

Accounts Receivable

Accounts receivable represents money owed to a company by its customers for goods or services delivered on credit.

Inventory Turnover

A measure of the number of times inventory is turned into goods sold during the year, computed by dividing the cost of goods sold by the average inventory.

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