FEDS 1
What is the main purpose of the Federal Reserve System?
A) To collect taxes
B) To control the nation’s money supply and interest rates
C) To print money for the U.S. Treasury
D) To lend money directly to consumers
B) To control the nation’s money supply and interest rates
The Federal Reserve Bank of New York is important because it:
A) Prints all U.S. currency
B) Conducts open market operations
C) Sets all national interest rates
D) Controls the U.S. Treasury
B) Conducts open market operations
What happens when the Federal Reserve buys government bonds from banks?
A) The money supply decreases
B) The money supply increases
C) Inflation falls
B) The money supply increases
18. When the Fed wants to stimulate (grow) the economy, it might:
A) Raise the discount rate
B) Sell government securities
C) Lower interest rates
D) Increase taxes
C) Lower interest rates
How long is a term for a Federal Reserve Board of Governors member?
A) 4 years
B) 8 years
C) 10 years
D) 14 years
D) 14 years
17. Which policy would the Federal Reserve most likely use to fight inflation?
A) Lower interest rates
B) Raise interest rates
C) Buy government bonds
D) Lower the reserve requirement
B) Raise interest rates
Who appoints the members of the Federal Reserve Board of Governors?
A) The President of the United States
B) Congress
C) State Governors
D) The U.S. Supreme Court
The President of the United States
2. When was the Federal Reserve System created?
A) 1776
B) 1865
C) 1913
D) 1933
C) 1913
What happens if the Federal Reserve increases the reserve requirement?
A) Banks have less money to lend
B) Banks can lend more money
C) Inflation increases
D) The money supply grows
A) Banks have less money to lend
Who is the current head of the Federal Reserve called?
A) Secretary of the Treasury
B) Chair of the Federal Reserve
C) President of the United States
D) Chief Economist
B) Chair of the Federal Reserve
5. If the Federal Reserve raises interest rates, what usually happens?
A) Borrowing becomes cheaper
B) Inflation increases
C) Borrowing becomes more expensive
D) The money supply grows rapidly
C) Borrowing becomes more expensive
9. What happens when the Fed lowers the reserve requirement for banks?
A) Banks can lend less money
B) The money supply decreases
C) Banks can lend more money
D) Interest rates increase
C) Banks can lend more money
How many regional Federal Reserve Banks are there in the United States?
A) 5
B) 7
C) 10
D) 12
D) 12
What is the Federal Funds Rate?
A) The rate banks charge each other for overnight loans
B) The rate the government charges banks
C) The rate consumers pay on credit cards
D) The rate on 30-year mortgages
A) The rate banks charge each other for overnight loans
Which of the following is not a part of the Federal Reserve System?
A) Board of Governors
B) Federal Open Market Committee (FOMC)
C) Member Banks
D) U.S. Mint
U.S. Mint
. Which of the following is a tool the Federal Reserve uses to influence the economy?
A) Tax collection
B) Open market operations
C) Import tariffs
D) Federal spendingc
B) Open market operations
Which of the following best describes “monetary policy”?
A) The government’s tax and spending decisions
B) The Federal Reserve’s actions to control the money supply and interest rates
C) Congress’s decisions on trade agreements
D) The Treasury’s printing of new currency
B) The Federal Reserve’s actions to control the money supply and interest rates
What is the term for the interest rate the Federal Reserve charges banks for short-term loans
A) Federal funds rate
B) Discount rate
C) Prime rate
D) Treasury rate
B) Discount rate
The Federal Reserve acts as the “lender of last resort” to:
A) Businesses
B) The Federal Government
C) Financial Institutions
D) Consumersc
C) Financial Institutions
6. What does the Federal Reserve do when it wants to increase the money supply?
A) Sells government securities
B) Buys government securities
C) Raises reserve requirements
D) Raises interest rates
B) Buys government securities