Monetary and Fiscal Policy

What is the primary task of the Federal Reserve System?

• To print money

• To regulate the amount of money in circulation

• To collect taxes

• To set educational policies

What year was the Federal Reserve System created?

• 1945

• 2001

• 1913

• 1776

What does the Federal Reserve use to control the money supply?

• School curriculums

• Employment rates

• Tax rates

• Interest rates

What is the main way the Fed controls the money supply?

• By regulating education

• By adjusting interest rates

• By changing the national budget

• By setting tax rates

What is the purpose of the bank reserve requirement?

• To increase the government's revenue

• To fund the Federal Reserve

• To prevent catastrophic bank runs

• To ensure banks have enough money to lend to the government

What is Quantitative Easing?

• A fiscal policy

• A new technology in banking

• A type of yoga

• A monetary policy involving the purchase of government bonds

What impact do low interest rates typically have on the economy?

• They cause deflation

• They tend to reduce unemployment and cause inflation

• They increase the cost of borrowing

• They have no impact on the economy

Why is the Federal Reserve considered independent?

• Because it operates from a foreign country

• Because it is funded by private banks

• Because its decisions do not need to be approved by Congress

• Because it is not part of the government

What is a major difference between monetary and fiscal policy?

• Monetary policy involves regulating the money supply

• Fiscal policy has no impact on the economy

• Monetary policy deals with government spending and taxation

• Fiscal policy is managed by the Federal Reserve

What does fiscal policy refer to?

• The government's ability to regulate banks

• The government's ability to print money

• The government's ability to raise taxes and spend money

• The government's ability to control interest rates