Federal Reserve and Monetary Policy

Who is in charge of Monetary Policy

• The Government

• The Federal Reserve System

• The states

• The Department of the Treasury

Monetary Policy is the Federal Reserve Systems attempt to...

• control the amount of money in circulation

• control the Federal Government's debt

• control state governments' spending

• none of these answers are correct.

An expansionary policy means that the Fed is attempting to

• increase the size of the nation's money supply

• decrease the size of the nation's money supply

A contractionary policy means that the Fed is attempting to

• increase the size of the nation's money supply

• decrease the size of the nation's money supply

Which policy would help fight inflation?

• Expansionary

• Contractionary

Which policy would help fight unemployment?

• Expansionary

• Contractionary

During a recession, the Fed should use...

• an expansionary policy

• a contractionary policy

Selling bonds

• increases money supply
• decreases money supply

Buying bonds

• increases money supply
• decreases money supply

Which of the following scenarios would cause the nation’s money supply to increase?

• Decreasing government spending
• Lowering interest rates
• Raising interest rates
• Selling bonds to investors