Econ- Unit 7

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Who created the Federal Reserve System?


When was the Federal Reserve Board created?


The Federal Reserve System is controlled by?

The Board of Governors of the Federal Reserve

Members of the Board of Governors of the Federal Reserve are appointed by the President for?

14-year terms

Where is the Board of Governors located?

Washington, D.C.

Which is NOT part of the Federal Reserve System?


How many districts make up the Federal Reserve System?


In which Federal Reserve district do you live?


What is the purpose of the Federal Open Market Committee (FOMC)?

to determine the nation’s monetary policy in order to help encourage a healthy economy

The number of times the FOMC typically meets is?


The Federal Reserve System can best be described as?

The central banking system for the United States

Which of these best describes the function of the Federal Reserve?

Responsible for monetary policy/money supply

Which organization established the Federal Reserve System?


The Federal Reserve System is controlled by?

The Board of Governors of the Federal Reserve

What does the Federal Reserve do?

Raises or lowers interest rates

Which of the following is NOT part of the Federal Reserve System?

The Federal Deposit Insurance Corporation

Which of these is NOT a function of the Federal Reserve?

Manage the federal deficit

The principal function of the Federal Open Market Committee is to?

buy and sell U.S. government bonds to influence the money supply

What tool does the Fed rely on the most in conducting policy?

??? domes change the discount rate got that one wrong

Monetary policy is implemented by?

the Federal Reserve

Which of the following is not a function of money?

speculative investment

Which of the following is NOT a tool of monetary policy?

Increasing federal spending

Today the MOST important function of the Federal Reserve System is?

regulating the nation’s money supply

Which of the following is NOT money?

Credit cards

The largest component of M1 is?


If the Federal Reserve Bank wanted to increase the amount of bank lending it will?

Lower the amount of money banks must hold as required reserves

First National Bank has demand deposits of $500. The required reserve ratio is 10%. FNB can lend?


The use of taxation or government spending to alter economic outcomes is?

Fiscal policy

To reduce inflation the federal government can?

??????isn’t lower taxes

Which of the following would NOT be an example of fiscal policy?

A law making certain drugs illegal

Which of the following best fit with fiscal policy?

Taxes and government spending

Who is responsible for U.S. fiscal policy?


Which of the following does not involve government spending?

buying a new car

What is the primary purpose of taxation?

to support the government

Which of the following is an example of contractionary fiscal policy?

Decreasing government spending

What is the effect of expansionary fiscal policy on the money supply?

increases it

What is the effect of contractionary fiscal policy on the money supply?

decreases it

The most important measure of the country’s overall economic performance is?

Gross Domestic Product (GDP)

The purchasing power of people’s incomes is most affected by?

The inflation rate

Which is used measure inflation?

The Consumer Price Index

A business cycle refers to?

the ups and downs of real GDP

What is a common definition of a recession?

Two consecutive quarters of declining GDP

Unemployment that is directly related to swings in the business cycle is?

cyclical unemployment

The low point in the business cycle is referred to as the?


A period of recovery from a recession is called a/an?


The unemployment rate?

does not count people who have stopped looking for jobs as unemployed

Which of the following persons would be considered unemployed?

A recent college graduate looking for first job

Monetary policy is?

The use of money and credit to influence the economy

The 2002 Job Creation and Worker Assistance Act, passed by Congress would be an example of?

fiscal policy

Gross Domestic Product is a measure of?

The dollar value of output produced domestically within a given time period

The largest component of GDP is?

consumer spending

CPI is a measure of the overall cost of?

goods and services bought by a typical consumer

The goal of the consumer price index is to measure changes in the?

cost of living

What would happen to employment if the government mandated a minimum wage above what employers currently pay?

employment would go down

What must the government do to reduce high inflation?

Decrease both spending and the money supply.

Banks have reserve requirements so that?

they have enough money on hand for customers

The buying and selling of government bonds by the Federal Reserve which affects interest rates, bank reserves and the money supply are?

Open Market Operations

A period during which production or economic activity expands, then contracts for several quarters or more, and then expands again; usually measured by real gross domestic product (GDP) is a?

Business Cycle

When government spending is greater than government income in a given year the results is known as?

Budget deficit

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