Federal Reserve Monetary Policy Quiz

What is the Federal Reserve's responsibility to use monetary policy to promote maximum employment and price stability?

• Single mandate

• Dual mandate

• Triple mandate

• Quadruple mandate

What is the highest level of employment that an economy can sustain while maintaining low and stable inflation?

• Maximum employment

• Full employment

• Minimum employment

• Partial employment

What is the Fed's target for inflation over time?

• 4%

• 3%

• 2%

• 1%

How many Reserve Bank Presidents and Governors make up the Federal Open Market Committee (FOMC)?

• 12 Reserve Bank Presidents + 7 Governors

• 20 Reserve Bank Presidents + 10 Governors

• 10 Reserve Bank Presidents + 5 Governors

• 15 Reserve Bank Presidents + 8 Governors

What is the primary tool used by the Fed to guide the federal funds rate?

• Overnight Reverse Repurchase Agreement Facility

• Discount Window

• Open market operations

• Interest on reserve balances

What is the interest rate that banks earn from the Fed on the funds they deposit in their reserve balance accounts?

• Federal funds rate

• Overnight Reverse Repurchase Agreement rate

• Interest on reserve balances rate

• Discount rate

What concept refers to the simultaneous purchase and sale of funds (or goods) in order to profit from a difference in price?

• Administered rate

• Federal funds transaction

• Arbitrage

• Reservation rate

What is the administered rate that is set above the FOMC’s target range, with the intention to serve as a ceiling for the federal funds rate?

• Open market operations rate

• Discount rate

• Overnight Reverse Repurchase Agreement rate

• Interest on reserve balances rate

What tool is used by the Fed to maintain ample reserves by buying and selling government securities?

• Interest on reserve balances

• Overnight Reverse Repurchase Agreement Facility

• Discount Window

• Open market operations

How does the Fed ensure that the federal funds rate stays within the target range?

• By setting the target range for the FFR

• By conducting open market operations

• By using its monetary policy implementation tools

• By adjusting the discount rate