Regulatory Policy Answers

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Why does the Fed pay interest to banks?

It is interest on money held in reserve.

It is interest on credit available to the Fed.

It is interest on loans taken by the Fed.

It is interest on government investments.

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

It lends consumers money when other banks will not.

It keeps all failing banks afloat to avoid economic disruption.

It helps finance and stabilize central banks internationally.

It offers banks financial protection to keep consumers from panicking.

best

limiting inflation and reducing unemployment

reducing unemployment and maintaining cash flow

controlling stagflation and reducing unemployment

managing credit and ensuring the money supply's liquidity

In how many cities are Federal Reserve district banks located?

What is a potential negative effect of an expansionary policy?

decreased borrowing

increased interest rates

increased inflation

decreased available credit

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