Unit 3B Review

Which of the following is NOT one of the three basic functions of money?

• store of value

• unit of account

• medium of exchange

• exchange replacement for gold or other valuable metals

Jennifer went shopping at Target. She saw a cute blouse that cost $25 and a graphic tee that was $10. What function of money allows Jennifer to compare the value of the 2 tops?

• store of value

• unit of account

• form of investment

• medium of exchange

What is the primary function of the Federal Reserve?

• To manage the nation's monetary policy.
• To regulate the stock market.
• To oversee international trade agreements.
• To manage the federal budget.

What is the main purpose of monetary policy?

• control the supply of money

• To regulate international trade
• To control inflation by raising taxes
• To increase government spending

Why would the Federal Reserve raise interest rates?

• To combat inflation and stabilize prices.

• To lower unemployment rates and encourage borrowing.
• To increase consumer spending and boost the economy.
• To support government spending and reduce debt.

Which of the following is NOT one of the 3 parts of the Federal Reserve's structure?

• Federal Open Market Committee

• Board of Governors

• Federal Reserve Banks (12)

• Government Oversight Office

Why is the Federal Open Market Committee (FOMC) essential to US monetary policy?

• The FOMC primarily focuses on international trade agreements.
• The FOMC manages the federal budget and government spending.
• The FOMC oversees open market operations.

• The FOMC is responsible for regulating stock market prices.

How is the Federal Reserve more insulated from politics than other government agencies?

• The Federal Reserve operates independently of the government.

• The Federal Reserve is directly controlled by the President.
• The Federal Reserve is funded by taxpayer money.
• The Federal Reserve's decisions are subject to congressional approval.

The Federal Reserve is an unusual central bank because it does NOT

• set monetary policy

• create currency

• have a Board of Governors

• conduct open market operations

How does the Federal Reserve affect the lives of individuals in the US?

• It determines income tax rates.

• It sets the minimum wage.

• It sets interest rates, which influences how people spend their money.

• It determines the national debt level.