2021 Monetary Policy Quiz

This is the government's policy concerning how much money and credit is available in the economy by using the Federal Reserve Bank.

• Fiscal Policy

• Monetary Policy

• Capital Policy

• State Policy

This is the federal agency that controls monetary policy in the United States.

• The Federal Reserve
• The Treasury Department
• The Internal Revenue Service
• The Bank of the United States

These are IOUs from the U.S. government to people that finance a little piece of the government's debt in exchange for a very small amount of interest

• Government Bonds, or Securities

• Government Credit

• Government Cash

• Government Holdings

This is the amount of any loan that is taken out that is charged in addition to the original principal taken out. 

• Bond
• Interest 
• Credit
• Reserve

Select all of the following that would be Federal Reserve adjustments to monetary policy during a recession?

• Take action that results in higher interest rates

• Decreasing the amount of money banks have to hold onto in reserve as a protection against losses.

• Increasing the amount of money banks have to hold onto in reserve as a protection against losses.

• Take action that results in lower interest rates

• Selling government bond/securities

Select all of the following that would be Federal Reserve adjustments to monetary policy during a period of inflation.

• Decreasing the amount of money banks have to hold onto in reserve as a protection against losses

• Selling government bonds/securities

• Increasing the amount of money banks have to hold onto in reserve as a protection against losses

• Taking action to increase interest rates.

• buying government bonds/securities

What would the Federal Reserve do to interest rates if thousands of people were losing their jobs each week?

• Raise them

• Lower them

• Keep them the same

• The Federal Reserve has nothing to do with this.

What would the Federal Reserve do to interest rates during a period of inflation?

• Raise them

• Lower them

• Keep them the same

• The Federal Reserve has nothing to do with this.

What would the Federal Reserve do to the mount of money banks have to hold onto in reserve as a protection against losses if prices for goods and services were rising rapidly each week?

• Raise it

• Lower it

• Keep it the same

• The Federal Reserve has nothing to do with this.

What would the Federal Reserve do to the mount of money banks have to hold onto in reserve as a protection against losses if thousands of businesses were under threat of bankuptcy?

• Raise it

• Lower it

• Keep it the same