The Federal Reserve

Who is considered one of the most influential people due to their role in monetary policy?

• Janet Yellen

• Paul Volker

• Ben Bernanke

• Milton Friedman

What is the primary purpose of the Federal Reserve?

• To collect taxes

• To print money

• To set fiscal policy

• To regulate and oversee banks and conduct monetary policy

How do low interest rates affect consumer behavior?

• Have no effect

• Increase savings

• Increase borrowing and spending

• Decrease borrowing

What was the Federal Reserve's response to the economic slump after the Dot Com bust and 9-11?

• Raised interest rates

• Boosted the money supply

• Decreased the money supply

• Increased taxes

What is a consequence of contractionary monetary policy?

• Increased inflation

• Decreased unemployment

• Increased interest rates and decreased spending

• Increased money supply

What does a decrease in the Reserve Requirement result in?

• No change in the economy

• Increased money supply

• Increased interest rates

• Decreased money supply

What is the most commonly used tool by The Fed to adjust the money supply?

• Quantitative Easing

• Changing the Reserve Requirement

• Adjusting the Discount Rate

• Open Market Operations

What was a unique action taken by The Fed during the 2008 financial crisis?

• Increasing the Reserve Requirement

• Selling government bonds

• Quantitative Easing

• Lowering taxes

Why have banks held onto more money since 2008?

• Decreased money supply

• Stricter lending regulations

• Lower demand for loans

• Higher interest rates

Why has actual inflation remained low despite increased money supply since 2008?

• Decreased government spending

• Increased consumer spending

• Banks have held onto excess reserves

• Banks have loaned out all the money