AnswersMO-EconomicsMonetary Policy: The Federal Reserve

Monetary Policy: The Federal Reserve Answers

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Federal Reserve interest federal fundsloan interest

A
Federal Reserve interest
B
federal funds
C
loan interest
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

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.
4

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

i
interest rates.
l
liquidity.
i
inflation rates.
c
credit.
5

Why is the Fed often referred to as a “lender of last resort,” or the last lender to turn to in a crisis?

I
It lends consumers money when other banks will not.
I
It keeps all failing banks afloat to avoid economic disruption.
I
It helps finance and stabilize central banks internationally.
I
It offers banks financial protection to keep consumers from panicking.
6

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
7

best

I
It sells more securities.
I
It charges banks more interest.
I
It increases reserve requirements.
I
It increases the money supply.
8

Which best describes a central bank's primary role?

A
controlling inflation
B
increasing credit
C
printing money
D
creating monetary policy
9

What is the full name of the US central bank, known as the Fed?

A
the Federal Reserve Bank
B
the Federal Deposit Insurance Corporation
C
the Federal Financial Institution
D
the Federal Bank
10

Which of these is a banking activity of the Fed?

A
printing money
B
regulating securities markets
C
storing money for banks
D
funding government programs

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Monetary Policy: The Federal Reserve Answers —…