Monetary Policy WIN

Monetary Policy WIN

12th Grade

8 Qs

quiz-placeholder

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Monetary Policy WIN

Monetary Policy WIN

Assessment

Quiz

Business

12th Grade

Hard

Created by

Krystle Walls

Used 6+ times

FREE Resource

8 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

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

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)