38. The Fed (part 2) Question Preview (ID: 50837)
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amount of money the bank must keep in its vaults
a) Reserve
b) Interest
c) Stock
d) Annuity
Banks borrow MORE at low interest rates because they do not have to pay back as much money.
a) True
b) False
c)
d)
amount money grows over time (mainly earned via loaning or saving)
a) interest
b) bank's reserve
c) The Fed
d) stock
What mechanism does The Fed use to loan money to banks?
a) interest rates
b) laws
c) executive orders
d) printer
How does The Fed restrict the supply of money in the economy?
a) Pass laws
b) raise interest rates
c) lower bank reserves
d) lower interest rates
banks loan LESS ► people spend LESS ► firms hire LESS ► people spend LESS
a) economy grows
b) economy shrinks
c) inflation is a not risk in this scenario
d) deflation is a risk in this scenario
Who loans the money to banks?
a) The Fed
b) small banks
c) stockholders
d) President
How does The Fed increase the supply of money in the economy?
a) pass laws
b) raise interest rates
c) lower interest rates
d) raise the bank's reserve
banks loan MORE ► people spend MORE ► firms hire MORE ► people spend MORE .....which of the following will NOT occur
a) economy grows
b) economy shrinks
c) inflation is a risk in this scenario
d) deflation is not a risk in this scenario
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 LESS ► firms hire LESS ► people spend LESS
c) banks loan LESS ► people spend MORE ► firms hire MORE ► people spend MORE
d) banks loan LESS ► people spend MORE ► firms hire LESS ► people spend LESS
Inflation is better than deflation.
a) True
b) False
c)
d)
Which is correct about spending in the economy?
a) banks loan MORE ► 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 MORE ► people spend LESS ► firms hire MORE ► people spend MORE
d) banks loan MORE ► people spend MORE ► firms hire LESS ► people spend LESS
Slow and steady inflation is accetpable.
a) True
b) False
c)
d)
Germany in the 1920s and modern nations in Africa have experienced hyper inflation.
a) True
b) False
c)
d)
A wheelbarrow full of money is _____
a) awesome, you're rich!
b) terrible, inflation has render money nearly worthless
c) not a reality
d) propaganda created by libertarians
Rolling into a store with a wheel barrow full of money due to hyperinflation has happened in modern history.
a) True
b) False
c)
d)
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) prices drop
b) value of money inceases
c) small increase in the price of good
d) a large increase in prices of goods, or the value of money drops significantly
Which is incorrect?
a) Lower interest interest rates = MORE borrowing
b) more borrowing = more spending = the economy grows
c) less borrowing = less spending = the economy shrinks
d) Lower interest interest rates = LESS borrowing
Which is incorrect?
a) Higher interest interest rates = LESS borrowing
b) less borrowing = less spending = the economy shrinks
c) Higher interest interest rates = MORE borrowing
d) more borrowing = more spending = the economy grows
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