Download Monetary Policy Practice EOCT Questions

Monetary Policy Practice EOCT
Questions
1. Which component of the Federal Reserve
System holds the most power in regards to
day to day monetary policy?
A
B
C
D
The Board of governors
Congress and the President
The 12 District banks
The Federal Open Market Committee
2. Monetary policy is defined as the
A taxing and spending decisions of the United
States Government.
B
buying and selling of currency in foreign
exchange markets.
C interaction of buyers and sellers in the
market place.
D decisions of the Federal Reserve System
that determine the money supply.
3. The actions of the FED that control and
regulate the amount of money in the economy
are referred to as
A
B
C
D
fiscal policy.
monetary policy.
international trade.
opportunity costs.
4. Which is the Fed MOST likely to do in the
event of a recession?
A
B
C
D
Buy treasury bonds on the open market.
Sell treasury bonds on the open market.
Raise the discount rate.
Raise the reserve requirement.
5. When the Fed is conducting open market
operations, they are buying or selling
A
B
C
D
stocks on the New York Stock Exchange.
goods in the product market.
factors in the factor market.
government bonds.
6. If the economy was in a recession and
Congress and the Federal Reserve Bank BOTH
wanted to correct it quickly, which policy
combination would be best?
A raise taxes, buy treasury bonds
B
cut taxes, sell treasury bonds
C increase government spending, sell
treasury bonds
D cut taxes, buy treasury bonds
7. A government decision to increase taxes is MOST
related to which combination of events?
Consumption
AggregateDemand
GDP
Adecrease
decrease
decrease
Bdecrease
increase
decrease
C increase
increase
increase
D decrease
decrease
increase
Key
1.
2.
3.
4.
5.
6.
7.
D
D
B
A
D
D
A