Raising reserve requirements requires banks to

withhold more of their funds to reduce the money supply

Historically, the Fed Funds Rate

hits a peak just prior to a recession.

The Reserve Rate (or Reserve Requirement) refers to the amount of

deposits commercial banks must keep in reserve.

GDP is commonly used as an indicator of

economic health of a country & gauge its standard of living

According to FIGURE 1, the cause of the 2001-2002 recession was

the U.S. Housing & Credit Bubble.

Which of the following represents a complete business cycle?

Expansion, peak, contraction, trough

The Fed’s most important function is to

control inflation without triggering a recession

Who creates & implements the policies of the Federal Reserve System?

Fed Chair Jerome Powell & Board of Gov of Federal Reserve

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E4.2: The Fed, GDP, & Unemployment

23 termsStudBud Administration108 plays

Economics

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Questions 23

Answers

1
According to FIGURE 1, the Fed Funds Rate has been
averaging above 22.5% since 1981.
on average above 10%.
near zero since December 2008.
no lower than 5%.
2
If the Fed fears inflation, it can restrict borrowing & reduce the amt. of revenue for banks by
printing more money at the reserve rate.
raising the fed funds rate.
increasing the discount rate.
increasing the reserve rate.
3
Raising reserve requirements requires banks to
withhold more of their funds to reduce the money supply
withhold more of their funds to increase the money supply
make more of their funds available to decrease money supply
make more of their funds available to increase money supply
4
Total value of all goods/services produced in a year
Federal Open Market Committee
Cyclical Unemployment
Fed Funds Rate
GDP
5
Historically, the Fed Funds Rate
hits a peak just prior to a recession.
hits a peak during a recession.
does not fluctuate.
hits a peak just after a recession.
6
The Reserve Rate (or Reserve Requirement) refers to the amount of
loans commercial banks must make to encourage econ growth
deposits commercial banks must keep in reserve.
deposits Federal Reserve Banks must keep in reserve.
cash Fed Reserve Banks hold in vaults during business cycle
7
Sets the Fed Funds Rate
Cyclical Unemployment
Federal Open Market Committee
The Federal Reserve
GDP
8
GDP is commonly used as an indicator of
economic health of a country & gauge its standard of living
whether the government will use fiscal or monetary policy
where a country is, in terms of the business cycle
the value of a nation’s currency.
9
Used to control how much banks lend
Federal Open Market Committee
The Federal Reserve
Cyclical Unemployment
Fed Funds Rate
10
According to FIGURE 1, the Fed Funds Rate hits a peak in what year?
1991
2008
1981
1961
11
When people are laid off as the economy slows down
Cyclical Unemployment
GDP
The Federal Reserve
Fed Funds Rate
12
According to FIGURE 1, the Fed Funds Rate has been
near zero since 2008.
averaging above 10% since 2000
too high to allow for investment.
too low to allow for investment.
13
According to FIGURE 1, the Fed Funds Rate hits a peak in what year?
1961
1981
2008
1991
14
According to FIGURE 1, the cause of the 2001-2002 recession was
the Effective Federal Funds Rate.
the U.S. Housing & Credit Bubble.
the Post 2009 Bubble.
historically high Federal Funds Rates.
15
According to FIGURE 2, which segment represents an economic expansion?
B
A
C
D
16
According to FIGURE 2, which segment represents an economic contraction?
A
B
C
D
17
According to FIGURE 1, it hit its peak at approximately
19%
10%
22.5%
7.5%
18
Which of the following represents a complete business cycle?
Expansion, peak, trough, contraction
Contraction, expansion, peak, trough
Peak, trough, contraction, expansion
Expansion, peak, contraction, trough
19
The Fed can promote borrowing and increase the amount of revenue available to banks by
lowering the fed funds rate.
increasing the reserve rate.
printing more money at the reserve rate.
increasing the discount rate.
20
According to FIGURE 1, the previous low for the Fed Funds Rate was in
1961
1991
2008
1981
21
The central bank of the United States
Fed Funds Rate
Cyclical Unemployment
The Federal Reserve
GDP
22
The Fed’s most important function is to
lend money to commercial banks & set the reserve rate
store currency and process checks
print enough money to keep the economy expanding
control inflation without triggering a recession
23
Who creates & implements the policies of the Federal Reserve System?
The President & Congress
President Trump
The President, Congress & Fed Chair Jerome Powell
Fed Chair Jerome Powell & Board of Gov of Federal Reserve

E4.2: The Fed, GDP, & Unemployment Flashcards | StudBud