The Fed and Monetary Policy

If the United States is experiencing inflation, the Fed will likely

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

In a recession, the Fed would likely

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

Raising the discount rate will reduce

• unemployment
• inflation

Lowering the reserve requirement will reduce

• unemployment
• inflation

A certificate by which U.S. government borrows money from people to 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

Cash that banks must keep and not loan out.

• excess reserves

• fiscal policy

• required reserves

• crowding out effect

The FED to increase the money supply would _____?

• raise the discount rate

• raise the required reserves

• buy bonds/securities

Which of the following scenarios would cause the nation’s money supply to increase?

• Decreasing government spending
• Lowering interest rates
• Raising interest rates
• Selling bonds to investors

____________ is the price paid for the use of money.

• Gold

• Monetary policy

• Fiscal policy

• The interest rate

How much money must the bank keep on hand if the Required Reserve is 10% and there is a deposit of $1000.

• 20

• 50

• 200

• 100