The Federal Reserve System
What year was the Federal Reserve created?
1913
What are the two goals of the Fed’s Dual Mandate?
Price stability and maximum employment
What is the Fed’s most commonly used monetary policy tool?
Open Market Operations
Who is the current Chair of the Federal Reserve (as of 2025)?
Jerome Powell
What inflation rate does the Fed typically target?
Around 2%
How many regional Federal Reserve Banks are there?
12
When inflation is high, what does the Fed usually do with interest rates?
Raises them
What happens to interest rates when the Fed buys government bonds?
They go down
How long is a term for a member of the Board of Governors?
14 years
During the COVID-19 pandemic, did the Fed raise or cut interest rates?
Cut them
Where is the Federal Reserve’s headquarters located?
Washington, D.C.
When unemployment is high, what might the Fed do to stimulate the economy?
Lower interest rates
What is the term for the rate the Fed charges banks for short-term loans?
The Discount Rate
How many times does the FOMC typically meet per year?
Eight times
What is the term for reducing the Fed’s balance sheet by selling assets?
Quantitative Tightening
Who appoints the members of the Board of Governors?
The President of the United States
Which goal focuses on keeping prices from rising too quickly?
Price stability
What policy tool determines how much money banks must hold in reserve?
Reserve Requirements
What major event led to the creation of the Federal Reserve in 1913?
The Panic of 1907
In recent years, the Fed’s main challenge has been controlling what?
Inflation
What is the name of the main policy-making body of the Fed?
The Federal Open Market Committee (FOMC)
Which economic measure does the Fed monitor to gauge employment progress?
The unemployment rate
What is it called when the Fed purchases long-term securities to inject liquidity?
Quantitative Easing (QE)
What event forced the Fed to play a major role in stabilizing the economy during 2008?
The Global Financial Crisis
What is the name of the rate the Fed influences that affects borrowing costs economy-wide?
The Federal Funds Rate