Monetary Policy: The Federal Reserve

Question 1

Choose the best word or phrase from each drop-down menu. The Federal Reserve increases the money supply when it is trying to encourage the economy to . Consumers are more willing to spend using credit when the money supply is higher because interest rates are . One major positive effect of increasing the money supply is in the unemployment rate.

Revolt · Accepted Answer

grow; Selection 1: grow; Selection 2: lower

Question 2

higher✔ lower

Revolt · Accepted Answer

lower

Question 3

Based on the information presented in the video, which of the following is likely to occur as a result of the Fed decreasing the money supply? Check all that apply.Employers will bring on large numbers of new employees.The inflation rate will stop growing or decrease.Consumers will spend less money, causing an economic slowdown.Prices for durable goods will increase dramatically.The unemployment rate may rise.

Revolt · Accepted Answer

The inflation rate will stop growing or decrease.; Consumers will spend less money, causing an economic slowdown.; The unemployment rate may rise.

Question 4

Choose the best word or phrase from each drop-down menu. Open market operations influence the directly. In order to lower the Federal Funds Rate, the Fed will securities, which the money supply in banks.

Revolt · Accepted Answer

Selection 1: Federal Funds Rate; Selection 2: buy; Selection 3: increases

Question 5

Based on the information presented in the video, what is the main goal of buying and selling government securities?

Revolt · Accepted Answer

to influence the Federal Funds Rate

Question 6

What did you include in your response? Check any that apply.

Revolt · Accepted Answer

The Fed lent money to banks.; The Fed bought securities to lower mortgage rates.; The Fed tried to increase spending by lowering interest rates.

Monetary Policy: The Federal Reserve Answers

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