AnswersMO-EconomicsMonetary Policy: The Federal Reserve

Monetary Policy: The Federal Reserve Answers

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1
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What is a potential negative effect of an expansionary policy?

A
decreased borrowing
B
increased interest rates
C
increased inflation
D
decreased available credit
2
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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
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

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

A
saving.
B
spending.
C
borrowing.
D
investing.
5

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?

A
Borrowing will decrease.
B
Investing will decrease.
C
Inflation will increase.
D
Liquidity will increase.
6

In how many cities are Federal Reserve district banks located?

A
4
B
12
C
50
D
8
7

Which best describes a central bank's primary role?

A
controlling inflation
B
increasing credit
C
printing money
D
creating monetary policy
8

Federal Reserve interest federal fundsloan interest

A
Federal Reserve interest
B
federal funds
C
loan interest
9

Which statement best describes how the Fed responds to recessions?

A
It sells more securities.
B
It charges banks more interest.
C
It increases reserve requirements.
D
It increases the money supply.
10

Economists studying the money supply categorize the status of the money based on

A
interest rates.
B
liquidity.
C
inflation rates.
D
credit.

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Monetary Policy: The Federal Reserve Answers —…