Which entity of the Federal Reserve is responsible for monetary policy?
Monetary Policy WIN

Quiz
•
Business
•
12th Grade
•
Hard
Krystle Walls
Used 6+ times
FREE Resource
8 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
The 12 Federal Reserve Banks
Congress
Federal Open Market Committee
The President of the U.S.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the role of the Federal Open Market Committee (FOMC)?
Conducting monetary policy
Regulating banks
Setting fiscal policy
Managing international trade
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
When would the Federal Reserve use expansionary monetary policy?
During a recession
During inflation
During both a recession and inflation
During neither a recession nor inflation
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the goal of contractionary monetary policy?
To stimulate the economy
To control inflation
To increase government spending
To reduce taxes
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What happens to interest rates during expansionary monetary policy?
They increase
They decrease
They remain unchanged
It depends on the specific situation
Answer explanation
When interest rates decrease, consumers are more likely to take out loans on things like cars and houses. Businesses will make investments in capital when interest rates decrease. Both of these things will stimulate the economy and put people back to work. The country will get out of a recession!
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the dual mandate of the Fed?
To maintain price stability and full employment
To maximize economic growth
To minimize income inequality
To promote international trade
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
When expansionary policy is used, the goal is to __________ consumer demand.
increase
decrease
maintain
none of these
Answer explanation
When consumer demand increases, it means that prices will increase. This increase in price will signal to businesses that they need to produce more supply. When producers need to increase production, they will hire more labor...this will put people back to work and stimulate the economy.
8.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Why would the Fed influence interest rates to increase?
To fight inflation
To stimulate the economy
To expand the economy
To fight a recession
Answer explanation
When inflation occurs, prices are rising in the economy. When the Fed raises interest rates it discourages consumers and businesses from taking out loans. This decrease in demand for goods, services, and capital will cause prices to lower. (Left shift in demand will lower the equilibrium price)
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