The Federal Reserve System is concerned with which of the following policies?

A. taxation

B. housing

C. fiscal

D. monetary

The correct answer is D

To fight inflation, the Federal Reserve sometimes

A. lowers the discount rate.

B. raises income taxes.

C. reduces reserve requirements on checking accounts.

D. slows the growth of money and credit in the economy.

The correct answer is D

Which is not a monetary policy tool of the Fed?

A. open market operations

B. reserve requirements

C. the prime rate

D. the discount rate

The correct answer is C

Open market operations are carried out

A. on a daily basis.

B. at the request of the Board of Governors.

C. only prior to meetings of the Federal Open Market Committee.

D. at the request of Congress.

The correct answer is A

The discount rate is the rate that

A. Federal Reserve Banks charge banks for very short-term loans.

B. banks charge other banks for short-term loans.

C. banks charge businesses that borrow a minimum amount of capital.

D. the Fed charges the Treasury Department for selling U.S. government securities.

The correct answer is A

From May 1994 to February 1995, the Fed raised the discount rate four times. This indicates that the Fed was concerned primarily with

A. recession.

B. taxation.

C. inflation.

D. trade imbalances with European nations.

The correct answer is C

As a result of the Fed's securities purchases

A. over time, consumers will most likely find it more difficult to borrow from financial institutions.

B. the U.S. Treasury must pay for the purchase of these securities.

C. payment is made to the primary dealer responsible for the transaction.

D. interest rates will immediately go up.

The correct answer is C

Which of the following statements is true about the lag between a decision of the Federal Open Market Committee on monetary policy and its impact on the economy?

A. There is no lag.

B. It may take over one year for the effect of the policy decision to impact on the economy.

C. The lag exists for interest rate hikes but not for interest rate declines.

D. The lag exists for interest rate declines but not for interest rate hikes.

The correct answer is B

The Fed's goals in making monetary policy include all of the following except:

A. full employment

B. stable prices

C. an inflated currency

D. moderate economic growth

The correct answer is C

If the Federal Reserve is concerned that the economy may go into a recession they should

A. stabilize the money supply.

B. decrease the growth of money and credit in the economy.

C. increase the growth of money and credit in the economy.

D. hold an FOMC meeting.

The correct answer is C