Federal Reserve + Monetary Policy

This is the central bank of the United States. It regulates the economy by controlling the amount of money in circulation throughout the U.S.

• Fort Knox

• The Federal Reserve

• The Chamber of Commerce

• Office of Management and Budget

Inflation is...

• A general decrease in prices and rise in the purchasing value of money

• A general increase in prices and fall in the purchasing value of money

• A measure of how much unemployment there is in the country

Inflation occurs when...

• There is too much money in circulation throughout the economy

• There is not enough money in circulation throughout the economy

• Unemployment is high

The interest rate is...

• The amount of money a person pays as a fee for taking out a loan.

• The percentage of money a bank must keep out of every deposit someone makes

• A loan agreement or IOU between you and the government

When interest rates are low, people are more likely to...

• Take out a loan and spend money, helping the economy grow

• Save their money and not take out any loans, slowing the economy

When interest rates are high, people are more likely to...

• Take out a loan and spend money, helping the economy grow

• Save their money and not take out any loans, slowing the economy

The reserve rate is...

• The amount of money a person pays as a fee for taking out a loan.

• The percentage of money a bank must keep out of every deposit someone makes

• A loan agreement or IOU between you and the government

A government bond is...

• The amount of money a person pays as a fee for taking out a loan.

• The percentage of money a bank must keep out of every deposit someone makes

• A loan agreement or IOU between you and the government

When reserve rates are high, banks will be...

• Keeping more money and loaning out less, which takes money out of the economy

• Loaning out more money and keeping less, which puts more money into the economy

When reserve rates are low, banks will be...

• Keeping more money and loaning out less, which takes money out of the economy

• Loaning out more money and keeping less, which puts more money into the economy