Money And The Fed Question Preview (ID: 63498)


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A rise in prices as a result of an increase in demand without an increase in supply.
a) inflation
b) taxes
c) subsidies
d) regulation

After 1971, what type of currency did the United States adopt?
a) Fiat currency
b) Gold standard currency
c) Commodity currency
d) Silver Standard currency

Before 1971, how were dollars related to gold?
a) Dollars were printed without any backing.
b) Dollars were receipts that could be exchanged for gold.
c) Dollars were backed by silver.
d) Dollars had no relation to gold.

Why can the Federal Reserve print more money now compared to when the gold standard was in effect?
a) They have unlimited gold reserves.
b) They can borrow money from other countries.
c) They are no longer restricted by gold backing.
d) They can tax citizens more.

What is the primary function of the Federal Reserve (FED)?
a) To control government spending
b) To limit all economic activity
c) To limit all economic activity
d) To manage the money supply and stabilize the economy

What is a consequence of increasing the money supply in the economy?
a) Decreased demand for goods
b) Decreased prices
c) Increased savings
d) Increased inflation

Why do fast food wages tend to rise with inflation?
a) There is a high turnover and competition for workers
b) Fast food jobs are less desirable
c) Workers do not change jobs frequently
d) Fast food businesses have fixed wages

What is the effect of inflation on the prices of goods when demand increases but supply remains unchanged?
a) Prices increase
b) Prices decrease
c) Prices remain the same
d) Prices fluctuate wildly

What is a potential downside of increased money supply in the economy?
a) Economic growth
b) Unemployment
c) Higher prices (inflation)
d) Increased savings rates

The business cycle consists of periods of growth followed by periods of economic decline.
a) True
b) False
c)
d)

Decreased competition in the market
a) Spending decreases because households can't borrow money.
b) More loans are distributed
c) Consumer confidence increases.
d) The economy experiences rapid growth.

The Panic of 1893 is primarily associated with which industry?
a) The steel industry
b) The railroad industry
c) The agricultural industry
d) The textile industry

How does the Federal Reserve aim to prevent extreme economic downturns?
a) By completely removing interest rates
b) By managing the economy without intervention
c) By promoting competition among banks
d) By adjusting interest rates and regulating loans

Who initiates inflation?
a) Firms
b) Households
c) The Federal Reserve
d) President

During economic recessions, what does the Federal Reserve do to stimulate growth?
a) Decrease interest rates
b) Increase taxes on households
c) Reduce government spending
d) Sell off bank assets

Which of the following does NOT increase price?
a) Low Supply
b) High demand
c) Low Demand
d) None of the above

How can The Federal Reserve lower demand?
a) Lower interest rates
b) Raise interest rates
c) Print more money
d) Lower taxes

What was the effect of the high supply of railroads on railroad companies?
a) Increased profits for all companies
b) A drop in prices leading to financial distress
c) A reduction in competition
d) Enhanced investment opportunities

What is one consequence of too much concentration of money in one sector of the economy?
a) Decreased competition in the market
b) Guaranteed profits for investors
c) Increased economic stability
d) The potential for widespread economic failure

What can cause inflation?
a) low interest rates
b) high interest rates
c) high taxes
d) regulation

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