Federal Reserve, Money Summative Review

"The Fed" refers to the....

• Federal Bureau of Investigation
• Federal Government
• Federal Reserve System
• Federal Income Tax

Influencing the economy by changing the reserve requirement is called:

• Fiscal policy
• Monetary policy
• Tight Money
• Easy Money

The primary role of the Federal Reserve Bank is to steer the economy by

• controlling the budget
• setting spending levels.
• controlling the money supply.
• loaning out money.

The American Dollar bill is an example of

• Commodity Currency
• Representative Currency
• Fiat Currency
• Public Currency

The interest rate that the Federal Reserve sets and charges for loans to member banks

• prime rate

• discount rate

• Federal funds rate

• fiscal rate

If there is too much money moving in the economy, what will likely happen?

• The Fed will likely lower interest rates

• Prices will likely rise, causing inflation

• Prices will likely fall, causing many businesses to go bankrupt

• The government will likely lower taxes

Which of the following is the MOST liquid?

• a certificate of deposit that matures in 2 months

• money saved in your retirement account

• money in your checking account

• money in your wallet

Which item might be used as currency in a commodity money system?

• silver

• chickens

• sticks

• All of these

What is an action the Fed can take to impact monetary policy?

• change tax rates

• adjust the government's budget

• adjust interest rates

• all are correct

The Federal Reserve can force banks to keep more money on hand reducing the amount they can loan out using this tool:

• Discount Rate

• Reserve Requirement

• Tax Increase

• Lower Interest Rates