Inflation and Federal Reserve

The US economy is currently in the phase depicted by the letter D on the graph displayed. Which monetary policy will the FRS use?

• easy money

• contractionary

• expansionary

• tight money

In addition to monitoring banking & economic conditions, what are some of the functions of the Federal Reserve System?

• banking services for the gov't, issuing currency, raising/lowering taxes

• raising the debt ceiling, setting the discount rate, issuing currency

• setting the discount rate, regulating banks, regulating gov't spending

• banking services for the gov't, buying/selling US bonds, issuing currency

The FED's open market operations refers to

• changing the interest rate on loans

• paying member banks interest on the money they hold in reserve

• The buying or selling of bonds

• raising or lowering the discount rate

If the US economy is in the phase B on this graph, what monetary policy will the Federal Reserve apply?

• easy money

• expansionary

• tight money

• contractionary

In the economic situation represented by this graph, the FED will use a _______ monetary policy, where Congress and the President will enact a contractionary fiscal policy.

• easy money

• outside lag

• tight money

• inside lag

The Fed refers to the....

• Federal Bureau of Investigation

• Federal Government

• Federal Reserve

• Federal Income Tax

Influencing the economy by changing the reserve requirement or the Discount Rate is called:

• Fiscal policy

• Monetary policy

• Tight Money

• Easy Money

If the economy is expanding too quickly, the Federal Reserve will institute which type of monetary policy?

• Expansionary

• Contractionary

• Equanimitous

• Whole Dollar

If the Fed wanted to contract or tighten the economy to help fight inflation, they might

• Increase reserves to limit what banks can loan out

• Lower the interest rate

• Decrease reserves allowing banks to loan more

• Decrease government spending

What is the primary tool used by the Federal Reserve to control inflation?

• Open market operations

• Taxation

• Government spending

• Foreign exchange intervention