The Fed Pop Quiz

What is the purpose of the Federal Reserve system?

• To collect taxes

• To set educational standards

• To regulate the money supply and maintain stability

• To oversee national defense

What is the 'Reserve Requirement'?

• The minimum interest rate set by the Federal Reserve

• The total assets a bank must possess

• The minimum amount of reserves a bank must hold against deposits

• The number of loans a bank can issue

Why was the Federal Reserve created in 1907?

• To increase personal savings

• To stabilize the stock market

• To address a financial panic

• To reduce government spending

What is one of the main goals of the Federal Reserve?

• To decrease the number of banks

• To ensure a stable pricing system

• To provide more effective supervision of banking in the U.S.

• To limit the amount of money individuals can borrow

Which statement best describes the role of the Federal Reserve in simple terms?

• To ensure that money is only available to large businesses

• To make sure the money supply can be changed as needed and ensure banks are doing the right things

• To prevent any new businesses from forming

• To control the entire economy directly

What is the Federal Reserve primarily known as?

• The central banking system of the USA

• A federal government agency

• A private banking corporation

• A state-owned enterprise

What is the first step in the process of check clearing according to the image?

• The check writer's bank deducts the amount from the account.

• The check makes its way to the regional reserve bank.

• You deposit a check.

• The bank encodes, endorses, and sends the check to the reserve bank.

How do banks benefit from loans according to the image?

• Banks pay interest to depositors.

• Banks keep the difference between interest paid out and interest received.

• Banks receive loans from the Federal Reserve.

• Banks charge fees for depositing checks.

What is one of the roles of the Federal Reserve as it relates to the government?

• It provides educational services.

• It acts as the government's bank.

• It manages national parks.

• It oversees healthcare regulations.

Why does the Federal Reserve rely on either an easy-money policy or a tight-money policy?

• To control inflation and unemployment

• To regulate education policies

• To manage healthcare services

• To oversee environmental regulations