EPF Monetary Policy Review

What is monetary policy?

• The government decides how much to spend and tax.

• The Federal Reserve decides how much to spend and tax.

• The government regulates the amount of money in the economy.

• The Federal Reserve regulates de amount of money in the economy.

How many district banks does the Fed have?

• 7

• 40

• 1

• 12

Who does the Fed serve?

• Civilians

• Military

• Banks

• Federal employees

What are the three ways that the Fed controls money?

• Office of Management and Budget (OMB)

• Open Market Operations (OMO)

• Discount Rate

• Reserve Requirement

Which one is the most used tool by the FED?

• Open Market Operations (OMO)

• Discount Rate

• Reserve Requirement

What does the Fed do to speed up the economy?

• Buy securities by depositing money in banks

• Sell securities to banks

What is the discount rate?

• Sale!

• The money the Fed charges to give loans to banks

• The money the Department of Treasury charges to give loans

• The money that must only be spent to pay off the national debt

What would the Fed do to the discount rate if it wants to pull money out of the economy?

• Lower the rate

• Raise the rate

What is the Reserve Requirement?

• The percentage that banks shouldn't lend

• The money banks can lend

• The percentage of money in the economy in total

• Money that the military can only use

If the Fed wants to decrease the money supply, what does it do with the Reserve Requirement?

• Decreases it

• Increases it