Fiscal and Monetary Policy

Which of the tasks listed below is one of the tasks conducted by the Federal Reserve System?

• executing fiscal policy

• printing money

• setting the federal government budget

• making loans to commercial banks

Due to inflation, the Federal Reserve decides to decrease the money supply. Which of the following will the Federal Reserve most likely do?

• decrease the discount rate

• buy bonds

• raise the reserve requirements

• implement expansionary monetary policy

When banks borrow money from the Fed. the price of the loan is known as...

• open market operations

• federal funds rate

• discount rate

• reserve requirements

The percentage of each deposit a bank must keep in its vaults and not loan out is called

• extra reserves

• excess reserves

• required reserves

• requested reserves

Sam is saving the money he earns from his part time job as a cook at Burger King to buy a car. Sam is illustrating which function of money?

• portability

• medium of exchange

• store of value

• unit of account

Peyton takes Jordan on a date. They have dinner at Long Horn which cost him and then they head to see a movie.

This date illustrates which function of money?

• medium of exchange

• divisibility

• standard of value

• unit of account

The Federal Reserve System is comprised of ______ districts, a board of governors, member banks, and the federal open market committee.

• 24

• 12

• 8

• 50

Which of the following statements is true concerning fiat money and commodity money?

• commodity money is used by most modern nations

• fiat money has evolved overtime to include salt, jewels, furs, and corn

• fiat money is backed by the nations government

• fiat money does not establish a standard of value

Which of these fiscal policies would be used to reduce inflation?

• increase reserve requirement

• decrease government spending

• decrease taxes

• selling bonds on the open market

If real GDP is in decline what fiscal policy actions might Congress do to stop the decline in real GDP?

• raise taxes

• raise interest rates

• raise government spending

• raise the reserve requirement