Monetary Policy: The Federal Reserve

Question 1

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

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liquidity.

Question 2

Federal Reserve interest federal fundsloan interest

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federal funds

Question 3

Why does the Fed pay interest to banks?

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It is interest on money held in reserve.

Question 4

Which best describes a central bank's primary role?

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creating monetary policy

Question 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?

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Borrowing will decrease.

Question 6

Which of these is a banking activity of the Fed?

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storing money for banks

Question 7

best

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limiting inflation and reducing unemployment

Question 8

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

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the Federal Reserve Bank

Question 9

In how many cities are Federal Reserve district banks located?

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12

Question 10

best

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It increases the money supply.

Monetary Policy: The Federal Reserve Answers

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