Level 11 Review Roll of Money, Federal Reserve, and Monetary

"The Fed" refers to the....

• Federal Bureau of Investigation

• Federal Reserve System

• Federal Government

• Federal Income Tax

The Federal Reserve

• is made up of 12 district banks

• is made up of commercial banks that operate independently from one another.

• is managed by a 11-member board of directors.

• None of the above

Fee charged to borrow money

• Inflation

• Discount rate

• 
  Interest

• Reserve requirement

Influencing the economy by changing the reserve requirement is called:

• Fiscal policy

• Tight Money

• Monetary policy

• Easy Money

What does Inflation do to the value of money?

• Makes it go up.

• Makes it stay the same.

• Makes it go down.

• Makes it expand

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

• controlling the budget

• controlling the money supply.

• setting spending levels.

• loaning out money.

How does lowering the discount rate influence the money supply?

• It makes borrowing cheaper, meaning more spending.

• it makes borrowing more expensive meaning less spending

• the cost of borrowing stays the same.

• None of the above

How does the Fed selling bonds influence the money supply?

• It increases inflation

• It means consumers have more money to spend.

• It means consumers have the same amount of money to spend.

• Consumers buy bonds, meaning they are not spending money, reducing the money supply, lowering inflation.

How does raising the reserve requirement influence the money supply?

• Banks are required to keep less money in their vaults meaning they can lend and people can spend.

• Banks are required to keep more money in their vaults, meaning they cannot lend and people cannot spend.

• It has no influencee

• It raises the cost of capital.

What is the gold standard?

• one unit of currency is equal to a set amount of gold

• the level by which gold is judged

• 
  the use of gold as a medium of exchange

• the idea that gold can buy everything