Economics: Today and Tomorrow © 2012

Chapter 15: The Federal Reserve System and Monetary Policy

The Federal Reserve System and Monetary Policy

1
Decisions to raise or lower interest rates are made by the ______.
A)Board of Governors
B)Federal Advisory Council
C)Federal Open Market Committee
D)President
2
Where are the headquarters of the Federal Reserve located?
A)San Francisco.
B)Washington, D.C.
C)Richmond.
D)Boston.
3
You write a check and mail it to the company’s California address. How does the company get its money?
A)The company mails the check to your bank which then ships the cash back to California.
B)The company takes the check to the San Francisco Federal Reserve Bank and cashes it.
C)The company deposits the check in its own bank and then the Fed’s check clearing process takes over.
D)Every month the company sends people to out-of-state banks to cash the accumulated checks.
4
What is monetary policy?
A)Making decisions about designing and printing money
B)Changing the rate of growth of the money supply
C)Changing fiscal policy on taxing and spending
D)Lowering tax rates, which supply-side economists advocate
5
Fractional reserve banking makes it possible for banks to _____.
A)keep all deposits in reserve
B)keep no cash in their vaults
C)use some deposits to make loans
D)process checks
6
Which of the following policies makes credit expensive and in short supply?
A)Loose money policy
B)Tight money policy
C)Reserve requirements
D)Expansionary monetary policy
7
Which of the following is defined as a monetary policy that makes credit inexpensive and abundant?
A)Loose money policy
B)Tight money policy
C)Monetary policy
D)Fractional reserve banking
8
A high prime rate _____.
A)encourages borrowing
B)discourages borrowing
C)increases the money supply
D)helps new businesses
9
Which of the following choices is defined as the rate of interest that banks charge on loans to their best business customers?
A)Discount rate
B)Prime rate
C)Federal funds rate
D)Open-market operations
10
To encourage economic growth, the Fed could _____.
A)buy government securities and increase the reserve requirement
B)buy government securities and decrease the discount rate
C)sell government securities and decrease the reserve requirement
D)sell government securities and increase the discount rate
Glencoe Online Learning CenterSocial Studies HomeProduct InfoSite MapContact Us

The McGraw-Hill CompaniesGlencoe

Please read our Terms of Use and Privacy Notice before you explore our Web site. To report a technical problem with this Web site, please contact the Web Producer.