The FED and Monetary Policy

This monetary policy tool is used when banks borrow money from the FED to meet their reserve requirement

• Open market operations

• Reserve requirement ratio

• Discount rate

• Federal funds rate

This monetary policy tool is used when banks borrow money from each other to meet the reserve requirement

• Open market operations

• Reserve requirement ratio

• Discount rate

• Federal funds rate

This monetary policy tool is used to determine the amount of deposits that banks must hold

• Open market operations

• Reserve requirement ratio

• Discount rate

• Federal funds rate

This monetary policy tool involves the buying and selling of government bonds

• Discount rate

• Federal funds rate

• Open market operations

• Reserve requirement ratio

In a recession, the Fed would likely

• Increase the supply of money in the economy
• Decrease the supply of the money in the economy

If inflation is too high, the Federal Reserve should __________ the federal funds rate.

• Increase
• Decrease

What is one way the Federal Reserve System regulates the economy?

• regulating tariffs on foreign imports

• regulating the production of consumer goods

• regulating the amount of money in circulation

• regulating spending by the federal government