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what is a main goal of the Federal Reserve in its monetary policy? |
regulation of the stock market |
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the Federal Reserve System controls the size of the |
money supply |
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how might monetary policy be used to combat inflation fears? |
the Federal Reserve might raise interest taxes |
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what would MOST LIKELY happen if the FRS lowered interest taxes? |
Unemployment would be reduced in the short run |
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Which has LEAST LIKELY been the historical goal of the Federal Reserve’s monetary policy? |
decreasing the national debt |
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All of these represent? |
state capitals |
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How does a monetary policy of low interest rate affect consumers? |
it lowers saving rates |
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Which of these would deter inflation? |
a decrease in the price of securities |
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During a recession, what must happen to interest rates to spur economic growth? |
drop |
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A short-term monetary policy action would MOST LIKELY |
lower interest rate |
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what would be reasonable monetary policy during a period of high inflation? |
reduce the money supply |
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what are the three main characteristics of the Fed that make it unique to all other central bank systems in the world? |
-has a lot of independence from political authorities – relies on district banks to carry out banking policies developed on national level -member banks own stock in the Fed Reserve banks their districts |
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What are the 2 big reasons the Fed puts new money into circulation? |
-replace worn out note -increase amount of money |
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What are the 3 goals of the Fed and monetary policy? |
-promote sustainable economic growth -full employment -stable price |
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By regulating the money supply and the interest rates charged for credit the Fed influences |
money supply |
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A ____-money policy is usually adopted in a time of economic recession |
easy |
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the Fed usually adopts a ______money policy when they begin to fear there is too much money in circulation and it could lead to inflation. |
tight |
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focuses on achieving economic stability and growth by increasing the supply of goods and services throughout the economy |
supply-side economics |
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What is the gov’ts role in the supply-side economics? |
limited to providing firms with incentives to increase production |
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who was leading supporter of supply-side economics in its early yrs? |
Jean-Baptiste Say |
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which president is mostly associated with supply-side economic? |
Ronald Reagan |
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two major assumptions do critics of supply-side economics question? |
– economists can predict economic behavior of people -many of the tax cuts are unfair |
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who is considered the "father" of demand-side economics? |
John Maynard Keynes |
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Keyne’s reason based on his economic observations during the Great Depression? |
marketplace forces alone were not enough to increase aggregate demand |
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