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38. The Fed (part 2)
Test Description: SocialStudiesGames.net
Instructions: Answer all questions to get your test result.
1) What happens if the supply of a product goes down (i.e. game consoles become rare or shows become rare) and The Fed increases the supply of money
A
small increase in the price of good
B
prices drop
C
value of money inceases
D
a large increase in prices of goods, or the value of money drops significantly
2) Rolling into a store with a wheel barrow full of money due to hyperinflation has happened in modern history.
A
False
B
True
3) A wheelbarrow full of money is _____
A
terrible, inflation has render money nearly worthless
B
propaganda created by libertarians
C
awesome, you're rich!
D
not a reality
4) Germany in the 1920s and modern nations in Africa have experienced hyper inflation.
A
True
B
False
5) Slow and steady inflation is accetpable.
A
False
B
True
6) Inflation is better than deflation.
A
True
B
False
7) Which is correct about spending in the economy?
A
banks loan LESS ► people spend MORE ► firms hire MORE ► people spend MORE
B
banks loan MORE ► people spend MORE ► firms hire MORE ► people spend MORE
C
banks loan MORE ► people spend LESS ► firms hire MORE ► people spend MORE
D
banks loan MORE ► people spend MORE ► firms hire LESS ► people spend LESS
8) Which is correct about spending in the economy?
A
banks loan LESS ► people spend MORE ► firms hire MORE ► people spend MORE
B
banks loan LESS ► people spend MORE ► firms hire MORE ► people spend MORE
C
banks loan LESS ► people spend MORE ► firms hire LESS ► people spend LESS
D
banks loan LESS ► people spend LESS ► firms hire LESS ► people spend LESS
9) banks loan MORE ► people spend MORE ► firms hire MORE ► people spend MORE .....which of the following will NOT occur
A
inflation is a risk in this scenario
B
economy shrinks
C
economy grows
D
deflation is not a risk in this scenario
10) banks loan LESS ► people spend LESS ► firms hire LESS ► people spend LESS
A
deflation is a risk in this scenario
B
economy grows
C
economy shrinks
D
inflation is a not risk in this scenario
11) Who loans the money to banks?
A
stockholders
B
President
C
The Fed
D
small banks
12) How does The Fed increase the supply of money in the economy?
A
raise interest rates
B
pass laws
C
raise the bank's reserve
D
lower interest rates
13) How does The Fed restrict the supply of money in the economy?
A
raise interest rates
B
Pass laws
C
lower interest rates
D
lower bank reserves
14) What mechanism does The Fed use to loan money to banks?
A
executive orders
B
interest rates
C
printer
D
laws
15) amount money grows over time (mainly earned via loaning or saving)
A
stock
B
interest
C
The Fed
D
bank's reserve
16) amount of money the bank must keep in its vaults
A
Reserve
B
Stock
C
Annuity
D
Interest
17) Banks borrow MORE at low interest rates because they do not have to pay back as much money.
A
True
B
False
18) Which is incorrect?
A
Lower interest interest rates = LESS borrowing
B
Lower interest interest rates = MORE borrowing
C
more borrowing = more spending = the economy grows
D
less borrowing = less spending = the economy shrinks
19) Which is incorrect?
A
Higher interest interest rates = LESS borrowing
B
less borrowing = less spending = the economy shrinks
C
more borrowing = more spending = the economy grows
D
Higher interest interest rates = MORE borrowing
*select an answer for all questions
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