MP & Fed Tools

The Federal Reserve uses ______ to regulate the economy.

• Monetary Policy
• Fiscal Policy

The Federal Reserve is called "The Bankers Bank" because commercial banks use its services.

• False

• True

When the Fed sells bonds through open market operations, what is the effect on the money supply?

• increases money supply

• decreases money supply

When the Fed buys bonds through open market operations, what is the effect on the money supply?

• increases money supply

• decreases money supply

When the Fed sets high reserve requirements, what is the effect on the money supply?

• decreases the money supply

• increase the money supply

Which of the following would the FED use to increase the money supply?

• raise the discount rate

• raise the required reserves

• buy bonds/securities

• print more money

____________ is the price paid for the use of money.

• Gold

• Monetary policy

• Fiscal policy

• The interest rate

Monetary policy resulting in lower interest rates and greater access to credit; associated with an expansion of the money supply.

• tight money policy
• open market policy
• easy money policy
• excess reserve policy

Which of the following would be considered a contractionary monetary policy?

• The purchase of bonds/securities

• The sale of bonds/securities

• An increase in taxes

• A decrease in the discount rate

Which of these might be a concern during a peak of the business cycle?

• inflation

• unemployment rate

• gross domestic product