U2D6.2 EPF ET

What is one of the primary functions of the Federal Reserve System?

• To collect taxes

• To set bank regulations

• To manage public education

• To oversee national defense

What happens when the Fed lowers the reserve requirement?

• Banks must hold more money

• More money is pumped into the economy

• Interest rates increase

• The economy contracts

What is the discount rate?

• The interest rate on credit cards

• The prime rate that banks can borrow money from the FED

• The rate at which the government borrows money

• The rate at which consumers can borrow from banks

What is the purpose of raising the reserve requirement?

• To stimulate business expansion

• To increase consumer spending

• To lower interest rates

• To fight inflation

Which of the following is NOT a tool of monetary policy used by the Fed?

• Reserve requirement

• Fiscal policy

• Open market operations

• Discount rate