4.6 Monetary Policy

What are the Fed's 2 Mandates

• Stable prices

• Full employment

• Low interest rates

• To maximize profit

The Fed buys bonds...

• Contractionary

• Expansionary

Answer explanation

By buying bonds, the Fed is introducing more currency into the money supply

The Fed decreases the reserve requirement

• Expansionary

• Contractionary

Price stability and low unemployment rate

• Dual mandate of the Fed

• Goals of banks in the economy

• The two items monitored by Congress

Increasing the federal funds rate

• Expansionary

• Contractionary

The Federal Reserve was created in 1913 by...

• A Constitutional Amendment

• President Woodrow Wilson

• Congress

The Fed is divided into ___ regions/districts

• 12

• 99

• 10

• 50

The Federal Open Market Committee is made up of five regional bank presidents and...

• the Secretary of the Treasury

• their vice presidents

• members of the Congressional committee on Budget and Finance

• the Board of Governors

The tools of monetary policy may include the central bank's

• Discount Rate

• Interest on reserves

• open market operations

• required reserve ratio

What is the federal reserves key policy tool?

• Interest on reserves

• Discount rate

• Open market operations

• required reserve ratio