Understanding Monetary Policy and Economics

Front

What is the primary task of the Federal Reserve System?

Back

To control the money supply

Front

In what year was the Federal Reserve System created?

Back

1913

Front

Which of the following is NOT a function of the Federal Reserve? Clearing checks, Supplying currency, Setting tax rates, Setting interest rates

Back

Setting tax rates

Front

Explain how the Federal Reserve influences the money supply through Open Market Operations.

Back

By buying and selling government bonds

Front

What is the effect of lowering the discount rate on the economy?

Back

It increases the money supply

Front

Describe the relationship between interest rates and inflation.

Back

Low interest rates can lead to higher inflation.

Front

What is the purpose of the bank reserve requirement set by the Federal Reserve?

Back

To ensure banks have enough cash to meet withdrawal demands

Front

Analyze why the Federal Reserve is considered an independent body.

Back

It operates independently of political influence.

Front

How does the Federal Reserve's control over interest rates impact unemployment?

Back

High interest rates increase unemployment

Front

Evaluate the impact of Quantitative Easing on the economy.

Back

It increases the money supply