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Monetary Policy: The Federal Reserve Answers

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1
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Which best describes a central bank's primary role?

A
controlling inflation
B
increasing credit
C
printing money
D
creating monetary policy
2
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[BLANK]

A
Contractionary
B
Expansionary
C
Fixed
3

best

I
It sells more securities.
I
It charges banks more interest.
I
It increases reserve requirements.
I
It increases the money supply.
4

most likely

B
Borrowing will decrease.
I
Interest rates will decrease.
I
Investing will decrease.
I
Inflation will decrease.
5

Why does the Fed pay interest to banks?

A
It is interest on money held in reserve.
B
It is interest on credit available to the Fed.
C
It is interest on loans taken by the Fed.
D
It is interest on government investments.
6

When the Fed adjusts its interest rate, it directly influences consumer

A
saving.
B
spending.
C
borrowing.
D
investing.
7

In how many cities are Federal Reserve district banks located?

A
4
B
12
C
50
D
8
8

best

l
limiting inflation and reducing unemployment
r
reducing unemployment and maintaining cash flow
c
controlling stagflation and reducing unemployment
m
managing credit and ensuring the money supply's liquidity
9

best

e
ensure that the government has a balanced budget
i
influence financial institutions globally
e
ensure that the government is sufficiently funded
s
steer the economy away from recession and toward growth
10

Which of these is a banking activity of the Fed?

p
printing money
r
regulating securities markets
s
storing money for banks
f
funding government programs

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