1) Functions that are performed by the federal reserve bank include assisting in the conduct of

monetary policy which set and change dicount rates, supervise and regulate authority over the
activities of banks located in their district, Government services which serve as commercial bank
for the U.S. treasury, responsible for new curreny issues for examlpe replacement of damaged
currency from circulation, check clearing which is when they process, route, and transfer funds
from one bank to another as checks clear through the Federal Reserve System, Wire transfer
services, and research services.
2) Discout rate is the interest rate on laons made by Federal Reserve Banks to depository
institutions, while a discout window is the faciity through which Federal Reserve Banks issue
loans to depository institiutions.
3) The board of governors of the Federal Reserve is a seven member board headquatered in
Washington, D.C. Each member is appointed by the president of the United States and must be
confirmed by the Senate. They serve a nonrenewable 14 year term.
4) The primary responsibilities of the Federal Reserve Board are the formulation and conduct of
monetary policy and the supervision and regulation of banks.
5) The main responsibilities of the FOMC are to formulate policies to promote full employment,
economic growth, price stablitiy, and a sustainable pattern of international trade.
6) Open market operations, discount rate changes, and reserve requirement ratio changes are all
tools used by the Federal Reserve to implement monetary policy.
7) A decrease in discount rates means that depositoy institutions may hold fewer reserves against
their transaction accounts or deposits. In turn, they are able to lend out a greater percentage of
their deposits, thus increasing credit availability in the economy
8) In January of 2003, the Fed implemented changes to its discount windwo lending that increased
the cost of borrowing but eased the terms. Now there are three lending programs offered
through the Fed’s discount window.
9)