AP Macro Unit 4 Review

Front

Which of the following is a tool used by the Federal Reserve to conduct monetary policy? a) Fiscal policy, b) Open market operations, c) Price controls, d) Import tariffs

Back

Open market operations

Front

In the short run, an expansionary monetary policy will likely lead to:

Back

Lower unemployment and higher inflation

Front

The money supply is increased when the Federal Reserve:

Back

Lowers the discount rate

Front

In the long run, an expansionary monetary policy will lead to:

Back

Lower output and lower prices

Front

The interest rate that banks charge each other for overnight loans is called the:

Back

Federal funds rate

Front

The Fed can influence the economy through all of the following tools except: The Reserve requirement, The discount rate, Open Market Operations

Back

The Prime Rate

Front

If the Fed wants to decrease the money supply, it can: Lower the discount rate, Buy government securities, Lower the federal funds rate, Raise the reserve requirement

Back

Raise the reserve requirement

Front

The rate of inflation is likely to increase if: The Fed increases the money supply

Back

The Fed increases the money supply

Front

When the Fed engages in contractionary monetary policy, it is trying to:

Back

Increase unemployment and decrease inflation

Front

If the Fed wants to decrease the federal funds rate, it can: Lower the reserve requirement, Sell government securities, Raise the discount rate, Raise the reserve requirement

Back

Lower the reserve requirement