17.

The percentage of deposits that banking institutions must hold "in the vault," as it were, is called the _____.

term deposit

demand deposit

mortgage requirement

reserve requirement

discount rate

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18.

The _____ is the rate of interest the Federal Reserve Board charges to loan money to any banking institution to meet reserve requirements.

prime rate

exchange rate

mortgage rate

premium rate

discount rate

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19.

Which of the following is true of the Federal Reserve Board (the Fed)?

The premium rate is the rate that the Fed charges to loan money to banking institutions.

The Fed is the lender of last resort for banks that want to borrow money.

Its only responsibility is to control the money supply in the economy.

The interest rates that the Fed charges are lower than those charged on loans of comparable risk elsewhere.

The low interest rate charged by the Fed encourages banks to borrow money from it.