Form Assessment #8

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

• the United States Treasury 
• the Federal Reserve System
• the Comptroller of the Currency
• the Federal Deposit Insurance Corporation

The Federal Reserve System conducts its business directly with

• the government and banks
• stock markets and bond markets 
•  individuals and firms
• product markets and factor markets

A decision by the Federal Reserve to lower the discount rate is intended to:

• make borrowing more difficult, thus reducing aggregate demand. 
• increase the unemployment rate, thus increasing aggregate demand.
• contract the money supply, thus reducing aggregate demand. 
• encourage borrowing and spending, thus increasing aggregate demand.

The Federal Reserve System is comprised of: 

• the U.S. Treasury, Bureau of Engraving and Printing, and the Office of Management and Budget (OMB). 
• one central bank in Washington, D.C
• one central bank in Washington, D.C., and a number of branch banks.
• welve Federal Reserve Banks across the United States and a number of branch banks

 When the Federal Reserve buys government securities on the open market, what effect does this action have on the nation’s money supply and aggregate demand?

• increases (Supply), increase (agg. demand)
• increases (supply),  decreases (agg. demand)
• decreases (supply),  increases (agg. demand)
• decreases (Supply), decreases (agg. demand)

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

• raising the discount rate
• buying government bonds
• lowering the reserve requirement rate
• raising personal income taxes

What does the Fed manipulate to affect monetary policy? 

• the supply of money in the economy
• the amount of taxes paid in the economy 
• the number of employees in the economy
• the value of all goods produced in the economy

Monetary policy includes actions:

• by states and the federal government to regulate the money supply. 
• by the Federal Reserve System to regulate the money supply
• by individuals and states to regulate the money supply.
• by the judicial branch to regulate the money supply.

Which monetary policy decision is meant to increase the U.S. money supply? 

• The Federal Reserve buys treasury bonds in the open market.
• The Federal Reserve borrows money from a foreign bank to cover a budget deficit.
• Congress passes a bill to reduce regulations on business monopolies.
• Congress passes a bill to reduce personal income taxes

An assembly line can increase a factory’s productivity because it allows workers to

• diversify their skills 
• focus on a specific task
• put in overtime hours on the job
• use a wide range of knowledge