F22 Updated Monetary & Fiscal Policy Practice

In a recession, the Fed would likely

• Increase the supply of money in the economy
• Decrease the supply of the money in the economy

Does increasing the money supply cause inflation or deflation?

• Inflation
• Deflation

The primary role of the Federal Reserve Bank is to steer the economy by

• controlling the budget
• setting spending levels.
• conducting monetary policy

• loaning out money.

If the government wants to stimulate(speed up) the economy the Federal Reserve will

• lower the Federal Funds Rate target

• raise the Federal Funds Rate target

• increase taxes

• decrease taxes

The CPI is up, and housing starts are at a fifteen-year high. What should the Fed do?

• contractionary

• expansionary

• Do Nothing

The Fed's Federal Open Market Committee

• advises the Fed on the overall health of the economy.
• is the Fed's primary monetary policymaking body.
• advises the Fed on consumer credit laws.

 Which group on the Federal Reserve organization chart decides whether to raise or lower interest rates?

• Federal Open Market Committee
• Board of Governors
• Federal Advisory Council
• Federal Reserve Banks

TRUE or FALSE: The Federal Reserve is owned by member banks.

• True
• False

Unemployment is at an all-time high. The Fed should

• increase FFR target

• decrease FFR target

• do nothing

What is an action of monetary policy?

• reduce taxes
• changing reserve requirements
• increase government spending

• borrow money for deficit