Monetary Policy 1

The interest rate the Federal Reserve charges on loans it makes to member banks

• Discount rate

• Open market operations

• Federal funds rate

• Reserve requirement

The FOMC targets the federal funds rate using this tool

• Reserve requirement ratio

• Discount rate

• Open market operations

• Consensus

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

• Discount rate

• Federal funds rate

• Open market operations

• Reserve requirement ratio

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

Who votes at FOMC meetings?

• The members of the Board of Governors

• Presidents of 5 Federal Reserve Banks

• Presidents of all 12 Federal Reserve Banks

• Both members of the Board and Presidents of the 5 Banks

How is contractionary monetary policy expected to influence interest rates?

• Raise them

• Lower them

How is expansionary monetary expected to influence the unemployment rate?

• Increase it

• Decrease it

If major newspapers feature the headline "Consumer Spending Rising Faster than Production!" the FOMC most likely will focus on

• contractionary monetary policy

• expansionary monetary policy

If major newspapers feature the headline "Unemployment Jumps to 9.2%," the FOMC most likely will focus on

• contractionary monetary policy

• expansionary monetary policy

A certificate of indebtedness issued by a government

• Stock

• Bond

• Type of money