Semester 1 review 1

Why does the Federal Reserve change monetary policy?

• to provide services to member banks

• to lessen the effect of natural business cycle

• to control the banking industry

How could the Federal Reserve encourage banks to lend out more of their reserves?

• reduce the discount rate

• reduce the money supply

• raise the required amount of reserve

How many Federal Reserve Districts are there?

• 9

• 20

• 12

What type of policy does the Federal Reserve use to counteract an expansion in GDP?

• easy money policy

• tight money policy

• fiscal policy

Why does a bank sometimes hold excess reserves?

• to make check clearing easier

• to be sure they can meet their customers’ demands

• to protect against high prices

Who appoints of the Chair of the Fed?

• President

• NASA

• Lil Durk

When you increase the required reserve, what happens to the money supply?

• increase

• decrease

• stays the same

Cutting taxes would be an example of __________________.

• decrease in discretionary spending.

• expansionary fiscal policy.

• contractionary fiscal policy.

When you buy a United States Savings Bond, you

• donate money for special government projects

• loan money to the government

• borrow money from a savings and loan association

The Office of Management and Budget

• has the final power to approve or disapprove the federal budget prepared and proposed by Congress

• is a part of the legislative branch

• is responsible for deciding how much money each government agency receives and overseeing the preperation of the federal budget