Monetary Policy Flashcard

Front

What is the primary role of the Federal Reserve System?

Back

To regulate the money supply and maintain financial stability

Front

Which of the following is NOT a tool of monetary policy? Open Market Operations, Discount Rate, Reserve Requirements, Government Spending

Back

Government Spending

Front

What is the target inflation rate set by most central banks, including the Federal Reserve?

Back

2%

Front

Which of the following is an example of an open market operation?
Changing the discount rate,
Buying or selling government securities,
Adjusting reserve requirements,
Implementing fiscal policy

Back

Buying or selling government securities

Front

What is the effect of raising the reserve requirement on the money supply?

Back

Decreases the money supply

Front

Which of the following is a direct effect of the Federal Reserve selling government securities? Increase in the money supply, Decrease in the money supply, Increase in government spending, Decrease in tax revenue

Back

Decrease in the money supply

Front

Which of the following is an example of a contractionary monetary policy?
Options:
Lowering the discount rate,
Increasing the reserve requirement,
Buying government securities,
Implementing quantitative easing

Back

Increasing the reserve requirement

Front

What is the primary tool used by the Federal Reserve to implement monetary policy?

Back

Open Market Operations

Front

Which of the following is a likely outcome of a central bank raising interest rates? Increased borrowing and spending, Decreased borrowing and spending, Increased inflation, Decreased savings

Back

Decreased borrowing and spending

Front

Which of the following is a characteristic of an expansionary monetary policy?
Increasing the reserve requirement,
Raising the discount rate,
Lowering interest rates,
Selling government securities

Back

Lowering interest rates