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.