Monetary Policy Terms

Match the definition with the correct term.

• Money Supply

• Total amount of money in the economy

• Reserve Requirement

• The percentage of deposits that a bank must keep on hand

• Inflation

• The interest rate the Fed charges for lending money to commercial banks

• Discount Rate

• General increase in prices & fall in purchasing value of money

• Bonds/Gov't Securities

• I owe you from the gov't that promises to pay the lender back w/ interest

The (a)   amendment gives us more rights than those in the Constitution

• 9th
• 10th
• 8th
• 7th
• 11th

Banks earn money by lending out money and charging customers__________.

• interest

• reserve requirement

• money supply

• inflation

If a bank has to keep $10 out of every $100 that has been deposited into it, their _______is 10%

• discount rate

• reserve requirement

• inflation

• money supply

Who manages the nation's money?

• Congress

• Federal Reserve

• President

• States

When banks need more money, they can borrow from the ​ (a)   and the interest rate that they are charged is called the​ (b)  

• Federal Reserve
• discount rate
• President
• other commercial banks
• reserve requirement
• money supply
• inflation

What is another name for the Federal Reserve?

• Bonds

• the Fed

• the Reserve

• Bank of America

What are some reasons for inflation? Choose all that are correct.

• Higher reserve requirements

• Increasing employees' wages

• Cost of raw materials goes up

• Cost of utilities goes down

True or False: The US government can tell businesses what to charge their customers?

• True

• False

If the government needed money to build a bridge, they would use _______to pay for it.

• inflation

• the discount rate

• bonds

• reserve requirement