Monetary and Fiscal Policy

Front

What is the primary task of the Federal Reserve System?

Back

To control inflation and encourage full employment

Front

In what year was the Federal Reserve System created?

Back

1913

Front

Term describing the increase of costs of production and prices of goods and services.

Back

Inflation

Front

What is the main way the Fed controls the money supply?

Back

By setting interest rates and purchasing securities

Front

What does the bank reserve requirement determine?

Back

The amount of money a bank can lend dependent on deposits

Front

What is Quantitative Easing?

Back

A way to influence the money supply by buying and selling government bonds.

Front

What effect do low interest rates usually have on the economy?

Back

They cause inflation and reduce unemployment.

Front

What is fiscal policy?

Back

The government's ability to raise taxes and spend money.

Front

Which of the following would NOT help the Fed improve a weak economy? Increasing interest rates, Purchasing government securities, Lowering interest rates, Lowering the federal funds rate

Back

Increasing interest rates

Front

The fiscal policy where the government will decrease its spending and increase taxes.

Back

Contractionary Policy