Unit 2: Managing the Economy

Money is anything that serves as a

• medium of exchange

• unit of account

• store of value

• all of the above

One myth about the Fed is

• they help prevent bank panics

• it is unconstitutional

• they interact with the marketplace to set interest rates

• None of the above

True or False: The Fed does not hold gold.

• True

• False

a rise in the cost of goods and services

• inflation
• discount rate
• interest
• monetary policy

Fee charged by the Federal Reserve Bank for other member banks to borrow money from the FED through the discount window?

• inflation

• interest

• discount rate

• reserve requirement

The goal of monetary policy is to

• sell bonds

• reduce unemployment

• prevent inflationary and recessionary economic periods

• increase tariffs on foreign countries

"The Fed" refers to the....

• Federal Bureau of Investigation

• Federal Government

• Federal Reserve System/Bank

• Federal Income Tax

The federal government is attempting to encourage spending by consume rs and businesses, a fiscal policy BEST serving this purpose would be

• decreasing taxes
• decreasing government spending
• reducing the investment tax credit
• balancing the budget

If the United States is experiencing inflation, the Fed will likely

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

In a recession, the Fed would likely

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