Monetary Policy Practice Questions

The central bank of the United States that sets policies designed to control the money supply is called the

• Congressional Bank

• Bank of the United States of America

• Federal Reserve

• Bank of U.S. Governors

How many Federal Reserve districts are there?

• 6

• 7

• 9

• 12

Monetary policy is best described as

• Benefits received by employees in addition to wages and salaries

• Actions by the Federal Reserve to expand or contract the money supply

• A system that relies on supply and demand to determine the value of currencies

• Actions by the Federal Government using spending to influence the economy

Which of the following are the four MAIN components of the Federal Reserve?

• a. Board of Governors, FOMC, Congress, and the 12 District Banks

• b. Boards of Governors, 12 District Banks, Member Banks, and Congress

• c. Board of Governors, FOMC, 12 District Banks, Member Banks

• d. FOMC, Advisory Committee, 12 District Banks, and the Member Banks**

A(n) (a)   would expand the money supply and tends to lower interest rates.

• tight money policy

• easy money policy

The Federal Reserve is the (a)   centralized bank of the United States.

• government owned

• privately owned

If the Real GDP is declining and the unemployment rate is increasing, the Federal Reserve may wish to enact (a)   .

• tight money policy

• easy money policy

When will banks restrict the number of loans given to people? (a)  

• Easy money policy

• Tight money policy