Monetary Policy

What does monetary policy refer to?

• the right amount of money flowing in the economy

• guarantees for bank accounts

• the number of people that have a bank account

• • insurance

  
  

What do good monetary policy decisions lead to?

• social progress

  
  

• economic growth

  
  

• job creation

  
  

• • all answers are correct

  
  

How do higher interest rates affect spending?

• more people decide to open bank accounts

• spending decreases as it costs more to borrow money

• spending increases as it costs less to borrow money

• spending stays the same as interest rates don't matter

Monetary policy involves the use of interest rates to control the level and rate of______ aggregate demand in the economy

The job of the Central Bank is to ..... the amount of money and credit in the economy

• examine

• investigate

• provide

• control

The rate which the Fed charges banks for a loan______

• Discount rate

  
  

• Prime rate

  
  

• Federal fund rate

  
  

• • Reserve ratio

  • 
    

The Federal Reserve has 3 tools at its.... to conduct Monetary policy: open market operations, the discount rate, and Reserve requirements.

• time

• hand

• disposal

• eyes

Fiscal policy involves setting goverment spending and tax rates, whereas Monetary policy involves money supply and interest rates set by______?

• Shadow Bank

• World Bank

• Central Bank

• • Commercial Bank

If the Central Bank_____reserve requirements,_____the discount bank rate, or buys more bonds, it will increase bank leading capacity.

• ...raises...increases...

  
  

• ...lowers...raises...

  
  

• ...lowers....drops...

  
  

• • ...highers...drops...

  
  

Cash, a house, bonds, and a savings account are financial assets. The assets from the least liquid to the most liquid?

• Cash, bonds, house, savings account

•  Bonds, house, savings account, cash

•  Savings account, cash, bonds, house

• • House, bonds, savings account, cash