Monetary Policy and the Federal Reserve (ATL Fed Reserve Video)

What is the purpose of a monetary policy?

• To influence interest rates and the supply of money and credit

• To promote price stability and high employment

• To provide a stable and secure monetary and financial system

• To prevent financial panics and disruptions in the economy

When was the Federal Reserve created?

• 1913

• 1977

• 100 years ago

• After the last recession

What is the role of the Federal Reserve during a financial panic?

• To lend money against a bank's good assets

• To gather grassroots information from main street people

• To adjust interest rates and affect inflation

• To provide forward guidance and quantitative easing

What is the Dual Mandate of the Federal Reserve?

• To maximize employment and maintain price stability

• To provide a stable and secure monetary and financial system

• To gather grassroots information from main street people

• To adjust interest rates and affect inflation

Where does the Federal Reserve gather grassroots information from?

• Farmers, real estate agents, car dealers, and factory owners

• The twelve Reserve Bank presidents and the Fed's Board of Governors

• The voting members of the Federal Open Market Committee

• The public through press conferences and public speeches

What tools does the Federal Reserve use to adjust interest rates and affect inflation?

• Open market operations and federal funds rate

• Quantitative easing and reserve requirements

• Forward guidance and public speeches

• Press conferences and economic projections

What is forward guidance?

• The Fed's descriptions of its likely future policy making

• The buying or selling of government securities

• The interest rate banks pay each other for borrowing money

• The injection of liquidity into the economy

What is quantitative easing?

• A way to inject liquidity into the economy and help keep long-term interest rates low

• The Fed's descriptions of its likely future policy making

• The buying or selling of government securities

• The interest rate banks pay each other for borrowing money

Why does the Fed chair hold press conferences after FOMC meetings?

• To inform the public about the Fed's actions

• To gather grassroots information from main street people

• To adjust interest rates and affect inflation

• To provide forward guidance and quantitative easing

What is the goal of the Federal Reserve's economic strategy?

• To create an economic strategy that works for each region

• To provide a stable and secure monetary and financial system

• To prevent financial panics and disruptions in the economy

• To maximize employment and maintain price stability