Federal Reserve

Front

What is the Federal Reserve?

Back

The central bank of the United States

Front

What is one of the main goals of the Federal Reserve?

Back

To encourage high employment and economic growth

Front

Which tool does the Federal Reserve use to influence the economy? Options: Setting the national budget, Control over interest rates, Regulating the internet, Controlling immigration

Back

Control over interest rates

Front

What happens when the Fed lowers interest rates?

Back

It encourages business expansion and consumer spending.

Front

Who makes up the Federal Open Market Committee?

Back

The Fed Chairman, the Fed Board of Governors, and regional Federal Reserve Bank presidents

Front

Why is the Federal Reserve able to operate with a degree of independence from political pressure?

Back

Because its Board of Governors have fixed terms and it's not funded by Congress

Front

What is the effect of the Fed raising interest rates?

Back

It makes borrowing more expensive, slowing down economic growth.

Front

How does the Federal Reserve's control of interest rates affect consumers?

Back

It affects the rates consumers pay on loans such as credit cards and mortgages.

Front

What can the Fed do if the economy is growing too fast and inflation rises?

Back

Increase interest rates

Front

What authority does the President of the United States have over the Federal Reserve?

Back

The President can appoint the Fed Chairman.