Econ: Monetary Policy: The Federal Reserve

8 October 2022
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10 test answers

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question
Which statement best describes how the Fed responds to recessions?
answer
It increases the money supply.
question
Economists studying the money supply categorize the status of the money based on
answer
liquidity
question
Which statements describe how the Fed responds to high inflation? Check all that apply.
answer
It charges banks more interest. It sells more securities. It decreases the money supply.
question
When the Fed adjusts its interest rate, it directly influences consumer
answer
NOT saving
question
When inflation is , the Fed aims to slow the economy.
answer
high
question
Which of these is a banking activity of the Fed?
answer
storing money for banks
question
Which best describes what a central bank uses monetary policy to do?
answer
steer the economy away from recession and toward growth
question
Which statement describes how borrowers will most likely benefit when the Fed reduces reserve requirements?
answer
Interest rates will likely decrease.
question
Why is the Fed often referred to as a "lender of last resort," or the last lender to turn to in a crisis?
answer
It offers banks financial protection to keep consumers from panicking.
question
If the domino effect occurs as a result of changes in the money supply, what will most likely happen as an immediate result of banks having more money to lend?
answer
If the domino effect occurs as a result of changes in the money supply, what will most likely happen as an immediate result of banks having more money to lend?