Economics: Macro 2

Selling bonds

• increases money supply
• decreases money supply

Buying bonds

• increases money supply
• decreases 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 circulation, when the FED orders a tight money policy?

• more money is put out into circulation
• less money is put into circulation
• circulation stays the same
• interest rates rise

The Federal Reserve

• is made up of 12 district banks and 25 branch banks.
• is managed by a 12-member board of directors.
• is made up of district banks that operate independently from one another.

Which part of the Fed decides when to raise or lower interest rates?

• Board of Governors
• Advisory Committee
• Chairman
• Federal Open Market Committee

What does Inflation do to the value of money?

• Makes it go up.
• Makes it go down.
• Makes it stay the same.

In a recession, the Fed would likely

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

What is the gold standard?

• one unit of currency is equal to a set amount of gold
• the level by which gold is judged
• the use of gold as a medium of exchange
• the idea that gold can buy everything