ECON - Unit 5 Practice Test

Front

How many District Banks are in the Federal Reserve System?

Back

12

Front

Federal Reserve Board of Governors members are appointed by the ____________ and confirmed by the ____________.

Back

President, Senate

Front

When money is used to compare the value of two different goods, it serves as a:

• medium of exchange
• store of value
• measure of purchase
• standard of value

Back

standard of value

Front

Which of the following is NOT one of the functions of the Federal Reserve?

• Performing banking functions for private banks
• Setting tax rates for Corporate banks
• Regulating banks
• Conducting monetary policy

Back

Setting tax rates for Corporate banks

Front

What do Fed member banks do with customer deposits?

Back

They keep a portion as legal reserves and loan out a portion at interest.

Front

Suppose the Fed wanted to engage in an expansionary monetary policy, which of the following should it do?

• Buy stocks on the stock market
• Increase the tax on bank profits
• Decrease the administered interest rates
• Make it harder for banks to loan money to businesses

Back

Decrease the administered interest rates

Front

Monetary policy refers to what the Federal Reserve does to influence the amount of __________ and __________ in the U.S. economy.

Back

Money and credit

Front

The goals of monetary policy do NOT include the promotion of _________________. Options: Maximum employment, Stable prices, Moderate long-term interest rates, Low taxes

Back

Low taxes

Front

If the Federal Reserve wanted to stimulate the U.S. economy and reduce unemployment, it would

Back

cause interest rates to decrease because low interest rates encourage business growth and expansion.

Front

If you were short of cash and needed a short term loan, which of the following would be your worst choice of a source for a loan? Options: local bank, credit union, pay day lender, credit card cash advance.

Back

pay day lender