
Understanding the Federal Reserve's Monetary Policy Tools
Interactive Video
•
Business, Social Studies
•
10th - 12th Grade
•
Hard

Aiden Montgomery
FREE Resource
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10 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the primary tool the Fed uses to control the money supply?
Changing the reserve requirement
Setting the Federal funds rate
Open market transactions
Adjusting the discount rate
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What does the target rate refer to in the context of the Federal Reserve?
The rate at which banks lend reserves to each other overnight
The interest rate on savings accounts
The rate at which the Fed lends to banks
The rate of inflation targeted by the Fed
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Why do banks maintain a certain level of reserves?
To avoid paying taxes
To meet regulatory requirements and ensure liquidity
To earn interest on reserves
To increase their profit margins
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How does the Federal Reserve support itself financially?
By collecting taxes
By earning interest on its assets
By selling government bonds
By charging interest on reserve accounts
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What happens to the Fed's surplus money after expenses?
It is reinvested in the stock market
It is distributed among private banks
It goes back to Congress
It is used to pay off national debt
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the nature of the Federal Reserve's independence?
It is officially independent but closely tied to the government
It is completely independent from the government
It is a private institution with no government ties
It operates under the direct control of Congress
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What action does the Fed take to expand the money supply?
Sell government bonds
Increase the discount rate
Raise the reserve requirement
Print notes and buy treasuries
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