CC 48: Monetary and Fiscal Policy (S_2021)

The Federal Reserve is in charge of carrying out monetary policy. What is the primary task of the Federal Reserve as part of monetary policy?

• controlling the nation's money supply

• printing the nation's currency 

• managing the nation's international trade 

The four responsibilities of the Federal Reserve include 1) clearing checks 2) setting banking rules 3) loaning money to banks and 4) _____.

• setting inflation rates.

• setting employment rates.

• setting interest rates.

The Federal Reserve controls the money supply by using the discount rate and the reserve requirement. If the Federal Reserve lowers both of these 

• then banks would have more money to loan out, which would increase the money supply. 

• then banks would have less money to loan out, which would  decrease the money supply. 

The third way the Federal Reserve controls the money supply is through buying and selling bonds. If the Fed buys bonds, this puts money back into the economy and increases the money supply. Another name for this action is 

• financial easing 

• quantitative easing

• quantitative measure

• financial injection 

The Federal Reserve is 

• part of the Judicial branch.

• part of the Executive branch.

• part of the Legislative branch.

• an independent body seperate from the Federal goverment.

Fiscal policy focuses on the Congress and use of ________ & _________ to impact the economy?  

• money supply & inflation 

• government spending & inflation 

• taxes & government spending

• unemployment & inflation 

When the government spends more money than it makes in tax revenue in a given year, this is called a 

• budget deficit.

• a national debt. 

The two biggest mandatory expenditures for the federal government are _____________ and _____________.

• farm subsidies and social security 

• social security and national defense

• medicare and national defense 

• medicare and social security 

Education and national defense spending are both examples of _________ spending.  This means Congress can change the amount they spend on these services from year to year.

• discretionary 

• mandatory 

Monetary policy is controlled by the _____________ while Fiscal policy is controlled by the ______________. 

• president and Congress, Federal Reserve Board

• Federal Reserve Board, the president and Congress.