U2D6.1 EPF ET

Which of the following is NOT a way the Federal Reserve manipulates the money supply?

• Taxation

• Discount rate

• Open market operations

• Reserve requirement

What is the effect of higher interest rates on loans?

• Interest rates have no effect on loans

• Loans are unaffected by interest rates

• Loans become more expensive

• Loans become cheaper

What is the purpose of the Federal Reserve's open market operations?

• To control the money supply

• To set tax rates

• To manage the national debt

• To regulate international trade

What is the relationship between the Federal Reserve and local banks?

• Local banks borrow money from the FED

• Local banks set the FED's policies

• Local banks are independent of the FED

• The FED borrows money from local banks

What is the effect of the Federal Reserve's discount rate on the economy?

• It sets the national tax rate

• It regulates international trade

• It determines the national budget

• It influences the cost of borrowing money