ECON/PF: The Economy & Monetary Policy

A general rise in the cost of goods and services is called ___________ .

• inflation

• discount rate

• interest

• monetary policy

A fee is charged by a Federal Reserve Bank (remember, the United States has 12) for other banks to borrow money from The FED. What is this fee called?

• inflation

• interest

• discount rate

• reserve requirement

The goal of The Federal Reserve's monetary policy is to ______________________ .

• sell bonds

• reduce taxes

• stabilize the economy, prevent inflation/recession and minimize unemployment

• increase tariffs on foreign countries

"The Fed" refers to the ____________________ .

• Federal Bureau of Investigation

• Federal Government

• Federal Reserve System

• Federal Income Tax

If the United States' economy is experiencing inflation (too much money in the economy + higher prices being charged), The Fed will likely __________________ .

• increase the supply of money in the economy

• decrease the supply of money in the economy

In a recession (not enough money in the economy + high unemployment), the Fed would likely _____________________ .

• Increase the supply of money in the economy

• Decrease the supply of the money in the economy

Putting TOO MUCH money into the economy might cause ____________________ .

• inflation

• deflation

How many Federal Reserve banks do we have in the United States?

• 5

• 10

• 12

• 21

Money loses its value when _____________________ .

• it becomes too plentiful

• it becomes too portabale

• is divisible

• is durable

Raising the discount (interest) rate for borrowers may help reduce ______________ .

• unemployment

• inflation