Money and the Fed

A Medium of exchange, measure of value, and a store of Value are called what?

• Functions of money

• Your pay check

• Characteristics of money

• Types of money

Money that has value because the government says it does is called-

• representative money

• fiat money

• currency

• credit

When there is a decline in the value of the US dollar, what will happen as a result?

• Increase use of bartering

• Increase amount of gold

• Increase use of credit cards

• Increase price of products

When the US abandoned the gold standard, what led to the decline in the US dollar?

• More currency (or fiat money) was being printed

• People didn't want to use fiat money

• Gold was a better option

• People saved more money

What is one way the Fed can counter (lower) unemployment and stimulate spending

• Sell securities

• Use tight monetary policy

• Decrease the discount rate

• Raise the discount rate

What can the Fed do to counter a recession?

• Raise the discount rate, make it easier to lend

• Raise the reserve requirement, make it easier to lend

• Use tight monetary policy, make it difficult to lend

• Use easy monetary policy, make it easier to lend

What may happen when interest rates are lowered?

• Less capital for loans are available

• Prices may inflate

• Unemployment may increase

• Taxes decrease

What should the Fed do to fight a recession?

• Buy bonds or securities

• Increase required reserve

• Increase discount rate

• Sell bonds or securities

What are interest rates?

• The unemployment rate

• How much the banks keep on hold

• The cost of borrowing money

• When prices rises

This is a paper component of the money supply, today consisting of Federal Reserve notes.

• coins
• currency
• both coins and currency
• debit cards