AnswersIL-EconomicsMonetary Policy: The Federal Reserve

Monetary Policy: The Federal Reserve Answers

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Based on the information presented in the video, which of the following is likely to occur as a result of the Fed decreasing the money supply? Check all that apply.

A
Employers will bring on large numbers of new employees.
B
The inflation rate will stop growing or decrease.
C
Consumers will spend less money, causing an economic slowdown.
D
Prices for durable goods will increase dramatically.
E
The unemployment rate may rise.
3

decreases✔ increases

A
decreases
B
✔ increases
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unemployment✔ inflationstagflation

A
unemployment
B
inflation
C
stagflation
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Free Banking Act✔ National Banking ActFederal Reserve Act

A
Free Banking Act
B
National Banking Act
C
Federal Reserve Act
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Depression of 1865Panic of 1893✔ Panic of 1907

A
Depression of 1865
B
Panic of 1893
C
Panic of 1907
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Choose the best word or phrase from each drop-down menu. The Federal Reserve increases the money supply when it is trying to encourage the economy to . Consumers are more willing to spend using credit when the money supply is higher because interest rates are . One major positive effect of increasing the money supply is in the unemployment rate.

Answers:
The Federal Reserve increases the money supply when it is trying to encourage the economy to .:grow
Consumers are more willing to spend using credit when the money supply is higher because interest rates are .:lower
One major positive effect of increasing the money supply is in the unemployment rate.:a decrease
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Choose the best word or phrase from each drop-down menu.

Answers:
Open market operations influence the directly.:Federal Funds Rate
In order to lower the Federal Funds Rate, the Fed will securities, which the money supply in banks.:buy
In order to lower the Federal Funds Rate, the Fed will securities, which the money supply in banks.:increases
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Based on the information presented in the video, what is the main goal of buying and selling government securities?

A
to reduce the strength of US currency
B
to decrease the unemployment rate
C
to increase the inflation rate
D
to influence the Federal Funds Rate
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What did you include in your response? Check any that apply.

A
The Fed lent money to banks.
B
The Fed bought securities to lower mortgage rates.
C
The Fed tried to increase spending by lowering interest rates.
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unemployment✔ inflationstagflation

A
unemployment
B
✔ inflation
C
stagflation
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Free Banking Act✔ National Banking ActFederal Reserve Act

A
Free Banking Act
B
✔ National Banking Act
C
Federal Reserve Act
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Depression of 1865Panic of 1893✔ Panic of 1907

A
Depression of 1865
B
Panic of 1893
C
✔ Panic of 1907
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Choose the best word or phrase from each drop-down menu.

Answers:
The Federal Reserve increases the money supply when it is trying to encourage the economy to .:grow
Consumers are more willing to spend using credit when the money supply is higher because interest rates are .:lower
One major positive effect of increasing the money supply is in the unemployment rate.:a decrease
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higher✔ lower

A
higher
B
✔ lower
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✔ a decreasean increase

A
✔ a decrease
B
an increase
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Choose the best word or phrase from each drop-down menu.

Answers:
Open market operations influence the directly.:Federal Funds Rate
In order to lower the Federal Funds Rate, the Fed will securities, which the money supply in banks.:buy
In order to lower the Federal Funds Rate, the Fed will securities, which the money supply in banks.:increases

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