Federal Reserve & Monetary Policy (2023/24) #3

Front

Which of the following was NOT a purpose of the Federal Reserve Act? Help banks acquire emergency cash reserves in times of crisis, Provide and maintain an effective and efficient payments system, Guard against the domino effect being caused by a bank failure

Back

Help the U.S. government pay France for the Louisiana Purchase

Front

The Federal Reserve was founded in response to

Back

Repeated bank failures and panics to better ensure the stability of the banking system

Front

Which of the following best describes the main purpose of the Federal Reserve in the U.S. economy? To supervise and regulate international bank operations within the U.S., To bail out major corporations in the event of market failures, To ensure a stable economy by managing the country's monetary supply., To promote the goals of the deep state and control of the U.S. political system by a group of shadowy power brokers

Back

To ensure a stable economy by managing the country's monetary supply.

Front

A rise in the cost of goods and services

Back

inflation

Front

Tight monetary policy is used by the Fed with the goal of

Back

reducing inflation

Front

Easy monetary policy is used by the Fed with the goal of

Back

decreasing unemployment

Front

Which type of monetary policy would the Federal Reserve put in effect to correct the following economic conditions? Unemployment is low and prices are rising steadily

Back

Tight money

Front

Which type of monetary policy would the Federal Reserve put in effect to correct the following economic conditions? The U.S economy is in a recession; factory orders are down, wages are falling and the economy appears to be slowing significantly.

Back

Easy Money

Front

What can be the unintended cost of easy money (especially if used for too long)?

Back

inflation

Front

What can be the unintended cost of tight money (especially if used for too long or put in place too quickly/aggresively)?

Back

Increasing unemployment