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The Fed And Monetary Policy
Test Description: The Fed and Monetary Policy
Instructions: Answer all questions to get your test result.
1) Why was the Fed created?
A
Government needed a way to collect taxes.
B
Government needed a way to communicate better.
C
Government needed a Commercial Bank.
D
Government needed a Central Bank.
2) What is the purpose of the Fed?
A
Ensure a stable economy for the long term.
B
Ensure a stable environment for the long term.
C
Ensure a stable economy for the short term.
D
Ensure that banks followed all the rules.
3) Which is NOT a responsibility of the FED?
A
Supervise and regulate the system of banks
B
Nation's monetary policy
C
Monitor the nation's tax policies.
D
Operate nation wide payments
4) Which is NOT a goal of Monetary Policy?
A
economic growth
B
economic prosperity
C
full employment
D
stable prices
5) A decline in value of the US dollar will likely result in an increase in the ………
A
use of credit cards
B
price of products
C
amount of gold reserves
D
use of bartering
6) Who is NOT a part of the structure of the Fed?
A
FOMC
B
FAMC
C
7 District Banks
D
12 Board of Governors
7) During a recession the FED will most likely react by
A
tightening the monetary policy making lending more difficult
B
A raising the discount rate to affect the monetary supply
C
easing monetary policy making easier to lend money
D
reducing open market transactions to reduce the money supply
8) What are the 3 tools for Monetary Policy?
A
Discount rate,Reserve investments,Overestimation markets
B
Discount rate,Reserve liabilities, Overflow markets
C
Discount rate, Reserve excess, open mitigation markets
D
Discount rate,Reserve requirements,Open Market Operations
9) When would you want to use EASY money policy?
A
Recession phase and unemployment
B
Expansion phase and unemployment
C
Expansion phase and inflation
D
Recession phase and inflation
10) When would you use TIGHT money policy?
A
Expansion phase and unemployment
B
Recession phase and unemployment
C
Expansion phase and inflation
D
Recession phase and inflation
*select an answer for all questions
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