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LT 4.4 Econ Formative
LT 4.4: I can explain monetary policy tools the Federal Reserve uses and evaluate the impact of those actions on the economy.
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1. When banks borrow money from the federal reserve, the interest the Fed charges is called the:
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Prime Rate
Bank Rate
Discount Rate
Reserve Rate
2. What is the policy most used by the Fed to change the money supply
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Changes in money creation policy
Changes in the discount rate
Changes in the Reserve Requirement
Open Market Operations
3. If the Federal Reserve wants to Slow Down economic activity, it could change monetary policy by
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Increasing taxes
Slowing the growth of the money supply
Allowing interest rates to fall
Allowing commercial banks to make higher- risk loans
4. How would the Federal Reserve encourage banks to make more loans to customers?
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Increase the reserve requirement
Increase taxes
Decrease the discount rate
sell government securities
5. If inflation is too high, the Fed will usually ______ the discount rate
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1 point
Increase
Decrease
6. If the Fed increases the reserve requirement, money supply will ____________.
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1 point
Increase
Decrease
7. If the Fed sells treasury securities on the open market, consumer spending will
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Increase
Decrease
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