Federal Reserve Quiz

What is the role of the Federal Reserve in the United States?

• It provides educational services

• It regulates the money supply in the US economy

• It oversees national defense

• It manages wildlife conservation

What does the Federal Reserve do to influence the economy?

• Changes the weather patterns

• Raises and lowers the discount interest rate

• Controls traffic laws

• Regulates internet usage

What actions can the Federal Reserve take regarding money circulation?

• It can only put money into circulation

• It can only remove money from circulation

• It can either put money into circulation or remove it

• It has no control over money circulation

What happens to consumer credit when the Federal Reserve raises the discount rate?

• Consumer credit becomes less expensive

• Consumer credit becomes more expensive

• There is no impact on consumer credit

• The Federal Reserve's actions are unrelated to consumer credit

What is a likely consumer behavior when the Federal Reserve raises the discount rate?

• Consumers buy more expensive goods

• Consumers buy more large goods

• Consumers buy fewer large goods

• Consumers' buying habits remain unchanged

What happens to consumer credit when the Federal Reserve lowers the discount rate?

• Consumer credit becomes more expensive

• Consumer credit becomes less expensive

• Consumer credit availability decreases

• Consumer credit terms become more restrictive

What is a likely consumer behavior when the Federal Reserve lowers the discount rate?

• Consumers buy fewer expensive goods

• Consumers buy fewer large goods

• Consumers buy more large goods

• Consumers' buying habits remain unchanged

What are stocks?

• Bonds issued by the government

• Shares of ownership in corporations

• Certificates of deposit

• Currency issued by central banks

What do shareholders have in a corporation?

• Full ownership and control

• Partial ownership in the corporation

• No ownership but receive regular payments

• Debt obligations of the corporation

Why are corporations permitted to sell stock?

• To decrease their market value

• To pay off their debts immediately

• To raise capital for the corporation

• To distribute profits evenly among employees