Monetary Policy: The Federal Reserve

Question 1

Identify the goals of the central bank when creating monetary policy. Check all that apply.reducing employmentinfluencing the business cyclereducing economic growthencouraging economic growthavoiding periods of time where little credit is available

Revolt · Accepted Answer

influencing the business cycle; encouraging economic growth; avoiding periods of time where little credit is available

Question 2

Which factor most directly influences how much money consumers are willing to borrow?

Revolt · Accepted Answer

changing interest rates

Question 3

✔ expansionarycontractionary

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✔ expansionary

Question 4

Choose the best word from each drop-down menu.

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✔ expansionary; Increasing the amount of credit that is available within an economy is done through monetary policy.: expansionary; The potential to cause inflation is accompanied by monetary policy.: expansionary; A(n) monetary policy can cause interest rates to increase.: contractionary

Question 5

expansionary ✔ contractionary

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✔ contractionary

Question 6

Choose the best word or phrase from each drop-down menu.

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securities; The Fed uses open market operations by buying and selling .: securities; The rate at which banks lend money and charge one another for storing money in the Fed is known as the .: Federal Funds Rate; When the Fed carries out open market operations to lower the Federal Funds Rate, the money supply and available credit will likely .: increase

Question 7

The rate at which banks lend money and charge one another for storing money in the Fed is known as the .

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Federal Funds Rate

Question 8

When the Fed carries out open market operations to lower the Federal Funds Rate, the money supply and available credit will likely .

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increase

Question 9

In this scenario, what is the Fed trying to do by increasing interest rates? Check all that apply.

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decrease the amount of money that banks have to lend; reduce the amount of available credit; discourage consumer borrowing by increasing interest rates on loans

Question 10

Choose the best word from each drop-down menu.

Revolt · Accepted Answer

Increasing the amount of credit that is available within an economy is done through monetary policy.: expansionary; The potential to cause inflation is accompanied by monetary policy.: expansionary; A(n) monetary policy can cause interest rates to increase.: contractionary

Monetary Policy: The Federal Reserve Answers

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