What happens if the money supply grows too fast?

inflation, reduced purchasing power

How is the Fed kept independent of political pressures?

funded independently of congress.

What is the federal funds rate?

The rate banks charge other banks

How is most money in the U.S. economy created?

deposits and lending in the banking system

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Ch. 14 Quiz

20 termsStudBud Administration175 plays

A review of the Federal Reserve, Monetary Policy and money creation.

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Questions 20

Answers

1
Which of the following is NOT a monetary policy tool used by the FED?
Open Market Operations
Consumer protection laws
Reserve requirements
Discount rate
2
What Act prohibits banks from refusing loans based on age, race, and gender?
The Federal Reserve Act
Fair Credit Disclosure Act
Community Reinvestment Act
Equal Opportunity Act
3
What monetary policy tool is used most often?
Discount rate
Reserve requirement
Additional funds
Open market operations
4
What happens if the money supply grows too fast?
none of the above
deflation
recession
inflation, reduced purchasing power
5
How is the Fed kept independent of political pressures?
the district banks lend money to minorities.
the Chairman of the Fed is elected every 4 years.
the district banks distribute currency as needed.
funded independently of congress.
6
To stabilize the economy, the Fed uses monetary policy and the government uses
Tax policy
Property policy
Fiscal policy
Budget policy
7
Which is considered M1?
credit cards
bitcoin
money market funds
travelers checks & currency
8
Which part of the Federal Reserve represents its regional or decentralized functioning?
Discount Rate
Reserve Requirement
Twelve District Banks
Board of Governors
9
A $20,000 deposit with a 10% reserve requirement has the potential money creation of
$60,000
$200,000
$2,000,000
$24,000
10
What is the federal funds rate?
The rate banks charge the federal reserve
The rate the Fed charges regional banks
The rate the Fed charges local banks
The rate banks charge other banks
11
Inflation is a result of
Too much money in circulation
None of the above
Not enough money in circulation
Stagnation
12
What happens if the money supply grows too fast?
prices decrease
prices increase
purchasing power increases
prices are the same
13
What tools does the Fed use to help stabilize the money supply?
TINSTAAFL
M1
Checking accounts
RR, DR & OMO
14
The reserve requirement increases, then the potential money creation
decreases
none is created
increases
remains the same
15
Reserve Banks act as a bank for the U.S. government by performing all of the following EXCEPT
processing Treasury's payments
minting U.S. coins
selling government securities
assisting the Treasury's cash management
16
What services are provided to banks by the Federal Reserve?
check clearing
profitable interest rates
plentiful gold supply
printing Federal Reserve Notes
17
The Fed selling a security to Johnny Wombucks for $50,000 would
cause stagflation
not affect the money supply
contract the money supply
expand the money supply
18
If the Federal Reserve buys government securities, how does it affect the money supply?
Not enough information to tell.
Doesn't affect
Expands
Contracts
19
How is most money in the U.S. economy created?
deposits and lending in the banking system
taxing less than government spending
importing goods and services
printing Federal Reserve Notes
20
If a person deposits $2000, how much can the bank loan out if the RR is 10%?
$2000
$1000
$1800
$1600

Ch. 14 Quiz Flashcards | StudBud