Which of the following statements is true of the federal funds market?
A) No banks are refused loans in the federal funds market.
B) Although the federal funds market aims to provide liquidity to needy banks, it is not very popular as overnight loans are logistically inefficient for large banks.
C) In the federal funds market, banks with a shortage of reserves borrow funds, while banks with an excess of reserves lends them out.
D) The interbank lending system works more efficiently in periods of financial panic than in periods of financial stability.
C
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The Banking Acts of 1933 and 1935
A) established the Federal Reserve System. B) increased central control of the Federal Reserve System. C) eliminated the authority of the Board of Governors to set reserve requirements. D) made the Secretary of the Treasury a member of the Board of Governors.
The value of fiat money is fundamentally determined by the: a. reputation of the bank that holds it
b. reputation of the person who holds it. c. value of the gold or silver for which it can be redeemed. d. value of the commodities for which it can be traded. e. value of comparable stocks and bonds.