Monetary Policy & Fed Tools PRACTICE

Front

During a recession the Federal Reserve will begin using

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expansionary monetary policy (easy money)

Front

During a fast economic expansion the Federal Reserve will begin using

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contractionary monetary policy (tight money)

Front

Lowering interest rates to stimulate the economy is called:

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Easy Money

Front

Decreasing the supply of money to to slow down the economy is called:

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Tight Money

Front

To deal with the economic meltdown caused by Covid, the Federal Reserve would do all of the following EXCEPT: Decrease the Reserve Requirement, Decrease the Discount Rate, Buy Bonds/Securities, Increase the Money Supply, Increase Interest Rates

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Increase Interest Rates

Front

Which of the following scenarios would cause the nation’s money supply to increase? Decreasing government spending, Lowering interest rates, Raising interest rates, Selling bonds to investors

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Lowering interest rates

Front

The manipulation of the money supply in order to influence the cost and the availability of credit is

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Monetary Policy

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Lower interest rates will encourage people to ...

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to borrow more and spend more

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When bank's have more money interest rates will

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decrease

Front

Increase borrowing and spending causes

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unemployment to decrease and inflation to increase