Econ Chapter 16 Formative Assessment

(K)

How could the Federal Reserve encourage banks to lend out more of their reserves?

• reduce the discount rate

• raise the required amount of reserve

• increase the prime rate

• reduce the money supply

(K)

The rate the Fed charges banks for a loan

• Discount rate

• Federal fund rate

• Reserve ratio

• Prime rate

(E)

Higher interest rates, increase in the reserve requirement and higher taxes are all examples of

• Monetary Policy

• Fiscal Policy

• Contractionary Policy (tight money)

• Expansionary Policy (easy money)

(J, E)

If inflation is too high, the Federal Reserve should __________ the federal funds rate.

• Increase

• Decrease

(A)

The Federal Reserve changing the Reserve Requirement is an example of .....

• Fiscal Policy

• Monetary Policy

(F)

Monetary Policy is the use of interest rates by the FED to keep the economy stable.

• True

• False

(F)

The central bank in the USA that regulates the monetary system

• The FED

• FDIC

• The IRS

• Social Security

(L)

Open market operations are

• The processes by which money enters into circulation.

• Reserves greater than the required amounts

• The buying and selling of government securities to alter the supply of money.

• Rates of interest banks charge on short-term loans to their best customers.

(F)

Monetary policies the Federal Reserve can adopt include all of the following EXCEPT

• raising the discount rate.

• buying government bonds.

• lowering the reserve requirement.

• raising personal income tax rates.

(F)

Which of the following is primarily responsible for the control of the money supply?

• The United States Treasury

• The Federal Reserve System

• The Federal Deposit Insurance Corporation

• The Comptroller of the Currency