Unit 5 Money/Federal Reserve/Monetary Policy

Institution that regulates and oversees the nation's banks and is considered the Central Bank of the United States

• Federal Reserve

• Federal Deposit Insurance Corporation

• Securities and Exchange Commission

• Bureau of Engraving and Printing

Which of the following is NOT a function of the Federal Reserve?

• provide financial services to member banks

• regulate and ensure a stable banking system

• conduct monetary policy

• taxation and revenue collection

Part of the Federal Reserve that sets monetary policy?

• Federal Open Market Committee

• Federal Advisory Council

• Bureau of Engraving and Printing

• Bureau of Mint

The Board of Governors are voting members of the Federal Open Market Committee and conduct monetary policy

• True

• False

Controlling of the money supply by the Federal Reserve to influence the cost and availability of credit

• fiscal policy

• supply side economics

• monetary policy

• GDP ouput expenditure model

Policy that allows the money supply to grow which causes interest rates to fall. Used to help stimulate the economy during slow economic times

• expansionary monetary policy (AKA loose money and easy money)

• contractionary monetary policy (AKA tight money and restrictive monetary policy)

Policy that decreases the money supply which causes interest rates to rise. Used to slow down inflation and keep prices stable.

• expansionary monetary policy (AKA easy money and loose money)

• contractionary monetary policy (AKA tight money and restrictive monetary policy)

most commonly used tool by the Federal Reserve which is the buying and selling of government securities (bonds)

• discount rate

• reserve requirement

• interest on reserves

• open market operations

Which of the following scenarios would increase the money supply?

• The Federal Reserve sells bonds on the open market

• The Federal Reserve buys bonds on the open market

• increasing the discount rate

• increasing the reserve requirement

Which of the following scenarios would decrease the money supply?

• decreasing the discount rate

• decreasing the reserve requriement

• increasing the discount rate

• buying government securities on the open market