Monetary Policy and the Federal Reserve

Which role of the Fed involves influencing the money supply?

• regulating banks

• not doing anything with interest rates

• fiscal policy

• monetary policy

If interest rates are low, then borrowers are likely to borrow...

• more

• less

If the fed increased the money supply, then what is it practicing?

• contractionary monetary policy

• expansionary monetary policy

• contractionary fiscal policy

• expansionary fiscal policy

What are liquid assets?

• cash money

• stocks

• bonds

How many ways does the Fed influence the money supply in the U.S.?

• 1

• 2

• 3

What will increasing the reserve requirement do?

• increase the money supply

• decrease the money supply

What is the money that the Fed charges banks to borrow called?

• reserve requirement

• discount rate

• open market operations

What does the Fed buying bonds do?

• decrease the money supply

• increase the money supply

Which of the three tools of the Fed do they use most often?

• discount rate

• open market operations

• Reserve requirement

Quantitative easing (QE) is an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply.

• True

• False