Monetary Policy WIN

Monetary Policy WIN

Assessment

Flashcard

Business

12th Grade

Easy

Created by

NANCY TREADWAY

Used 1+ times

FREE Resource

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8 questions

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1.

FLASHCARD QUESTION

Front

Which entity of the Federal Reserve is responsible for monetary policy?

Back

Federal Open Market Committee

2.

FLASHCARD QUESTION

Front

What is the role of the Federal Open Market Committee (FOMC)?

Back

Conducting monetary policy

3.

FLASHCARD QUESTION

Front

When would the Federal Reserve use expansionary monetary policy?

Back

During a recession

4.

FLASHCARD QUESTION

Front

What is the goal of contractionary monetary policy?

Back

To control inflation

5.

FLASHCARD QUESTION

Front

What happens to interest rates during expansionary monetary policy?

Back

They decrease

Answer explanation

When interest rates decrease, consumers are more likely to take out loans on things like cars and houses. Businesses will make investments in capital when interest rates decrease. Both of these things will stimulate the economy and put people back to work. The country will get out of a recession!

6.

FLASHCARD QUESTION

Front

What is the dual mandate of the Fed?

Back

To maintain price stability and full employment

7.

FLASHCARD QUESTION

Front

When expansionary policy is used, the goal is to __________ consumer demand.

Back

increase

Answer explanation

When consumer demand increases, it means that prices will increase. This increase in price will signal to businesses that they need to produce more supply. When producers need to increase production, they will hire more labor...this will put people back to work and stimulate the economy.

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