Monetary Policy: The Federal Reserve

Question 1

What is a potential negative effect of an expansionary policy?

Revolt · Accepted Answer

increased inflation

Question 2

Why does the Fed pay interest to banks?

Revolt · Accepted Answer

It is interest on money held in reserve.

Question 3

Which best describes a central bank's primary role?

Revolt · Accepted Answer

creating monetary policy

Question 4

Which statement describes how borrowers will most likely benefit when the Fed reduces reserve requirements?

Revolt · Accepted Answer

Interest rates will likely decrease.

Question 5

best

Revolt · Accepted Answer

steer the economy away from recession and toward growth

Question 6

[BLANK]

Revolt · Accepted Answer

Contractionary

Question 7

most likely

Revolt · Accepted Answer

Interest rates will decrease.

Question 8

If the domino effect occurs as a result of changes in the money supply, what will most likely happen as an immediate result of interest rates being increased?

Revolt · Accepted Answer

Borrowing will decrease.

Question 9

Which of these is a banking activity of the Fed?

Revolt · Accepted Answer

storing money for banks

Question 10

best

Revolt · Accepted Answer

It increases the money supply.

Monetary Policy: The Federal Reserve Answers

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