Answers IL-EconomicsMonetary Policy: The Federal Reserve

Monetary Policy: The Federal Reserve Answers

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In how many cities are Federal Reserve district banks located?

What is a potential negative effect of an expansionary policy?

decreased borrowing

increased interest rates

increased inflation

decreased available credit

Why does the Fed pay interest to banks?

It is interest on money held in reserve.

It is interest on credit available to the Fed.

It is interest on loans taken by the Fed.

It is interest on government investments.

Which statement best describes how the Fed responds to recessions?

It sells more securities.

It charges banks more interest.

It increases reserve requirements.

It increases the money supply.

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