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WorksheetsMonetary Policy and the Federal Reserve
Total questions: 30
Worksheet time: 31mins
Which policy would help fight inflation?
Expansionary
Contractionary
Which policy would help fight unemployment?
Expansionary
Contractionary
How many regional Federal Reserve Banks are there in the United States?
5
10
12
14
A contractionary policy means that the Fed is attempting to
increase the size of the nation's money supply
decrease the size of the nation's money supply
An expansionary policy means that the Fed is attempting to
increase the size of the nation's money supply
decrease the size of the nation's money supply
To decrease the money supply in a limited reserves environment, the Fed _________ government bonds
buys
sells
To increase the money supply in a limited reserves environment, the Fed _________ government bonds
buys
sells
To increase the money supply in a limited reserves environment, the Fed could _________ the required reserve ratio
raise
lower
In a limited reserves environment, the discount rate serves as a(n) ________ limit on the federal funds rate.
upper
lower
the interest rate that banks charge each other for overnight loans of reserves is called _________
the discount rate
the reserve requirement
the federal funds rate
open market operations
If the Fed is trying to reduce unemployment in a limited reserves environment, it is likely to __________ government securities.
buy
sell
If the Fed significantly raises the required reserve ratio in a limited reserves environment, aggregate demand will most likely __________
increase
decrease
If the economy is in an inflationary gap, in a limited reserves environment, the Fed is likely to ________ government bonds
buy
sell
Which of the following is an expansionary open market operation?
buying government bonds
selling government bonds
raising the discount rate
lowering the discount rate
lowering the required reserve ratio
Expansionary monetary policy (i.e. "loose" or "easy" or "accommodative" monetary policy) involves ________ the money supply
increasing
decreasing
Economy is in a recession. What should Fed do to increase the money $$$ supply?
decrease reserve requirement
decrease the discount rate
Open Market Committee buy bonds
all of these
If economy grows too rapidly, what is best option for the Fed consider for stabilizing economy?
increase reserve requirement
increase discount rate
sell U.S. Treasury Bonds
all of these
What does the "lender of last resort" mean with respect to the Federal Reserve?
it will lend money to a bank in a financial emergency
it has the power to decide how much money a bank can lend out
it can lend money to companies that have filed for bankruptcy
it makes decisions about who a bank can lend money to
Which of the following is FALSE regarding the Board of Governors for the Federal Reserve?
members are appointed for staggered, 14-year terms
there are 7 members with a chairperson
members cannot be reappointed
is is located in Philadelphia, PA
The goals of monetary policy include (more than one answer - pick all correct answers for credit):
regulating the amount of money circulating in the economy
Keep inflation high
Keep inflation low
Keep unemployment low
Raise the unemployment levels
Money that is backed up by the government's "word" is called...
currency mandate.
fiat money.
credit card.
What action can the Fed take to combat deflation in a limited reserves environment?
buy government bonds
sell government bonds
Which of the following actions would likely decrease the money supply?
lowering the discount rate
selling government securities
decreasing the reserve requirement
Who is a permanent member in the federal open market committee?
The president of the NY fed
The president of NC fed
Who appoints the board of governors?
The president
The senate
The HOR
The states
What is the primary tool used by the Federal Reserve to control the money supply?
Open market operations
Setting tax rates
Regulating trade policies
Issuing currency
Which of the following actions would the Fed take to combat high unemployment?
Increase the federal funds rate
Sell government securities
Lower the discount rate
Raise the reserve requirement
What is the effect of lowering the reserve requirement on the money supply?
It decreases the money supply
It increases the money supply
It has no effect on the money supply
It stabilizes the money supply
Who is the current Chairman of the Federal Reserve
Jeremy Prowl
Jerome Powell
Perome Jowell
Jowell Perome
Which of the following is a goal of the Federal Reserve's monetary policy?
Maximizing employment
Increasing government revenue
Reducing trade deficits
Controlling immigration
