Monetary Policy Quiz

Selling bonds

• increases money supply
• decreases money supply

Buying bonds

• increases money supply
• decreases money supply

Which of these is NOT a monetary policy tool?

• Discount rate
• Balance Accounts
• Open Market Operation
• Reserved Requirements

High reserve requirements 

• lower the money supply
• increase the money supply

Low reserve requirements 

• lower the money supply
• increase the money supply

"The Fed" refers to the....

• Federal Bureau of Investigation
• Federal Government
• Federal Reserve System
• Federal Income Tax

What is an action of monetary policy?

• reduce taxes
• changing reserve requirements
• increase spending
• borrow money for deficit

What happens to the money supply, when the FED conducts contractionary monetary policy?

• more money is put out into circulation

• less money is put into circulation

• circulation stays the same

• interest rates rise

If the Federal Reserve wanted to stimulate the economy (make it grow), they might

• Sell Treasury bonds
• Buy Treasury bonds
• Spend more money
• Spend less money

Which of the following scenarios would cause the nation’s money supply to increase?

• Decreasing government spending

• Lowering the discount rate

• Raising the discount rate

• Selling bonds to investors