This quiz works best with JavaScript enabled. Home > Economics > Monetary > Policy > Monetary Policy – Quiz 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Monetary Policy Quiz 6 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What are the 3 main responsibilities of the Federal Reserve? A) Reserve requirements, discount rate, open market operations. B) Check clearing, distribution of currency, banks supervision. C) Promote economic growth, stable prices, and control unemployment. D) None of above. Show Answer Correct Answer: C) Promote economic growth, stable prices, and control unemployment. 2. The Federal Reserve's primary policy tools include all of the following except A) Setting reserve requirements. B) Open-market operations. C) Changing the discount rate. D) Borrowing from foreign governments. Show Answer Correct Answer: D) Borrowing from foreign governments. 3. Which type of monetary policy involves increasing the growth of the money supply? A) Reserve monetary policy. B) Federal monetary policy. C) Contractionary monetary policy. D) Expansionary monetary policy. Show Answer Correct Answer: C) Contractionary monetary policy. 4. Actions by the FED that alter the supply and cost of money to achieve stable prices, stable interest rates, and full employment A) Monetary Policy. B) Policy policy. C) Fiscal Policy. D) Money money. Show Answer Correct Answer: A) Monetary Policy. 5. Expansionary Monetary policy moves the A) MS line to the right. B) MS line to the left. C) AD line to the left. D) MD line to the left. Show Answer Correct Answer: A) MS line to the right. 6. As a result of the financial institution crisis of the 1980s, S&Ls are now insured by the A) FDIC. B) Fed. C) FSLIC. D) National Banking System. Show Answer Correct Answer: A) FDIC. 7. Who was the first woman to be chairperson of the Federal Reserve and Secretary of the Treasury? A) Kamala Harris. B) Nancy Pelosi. C) Janet Yellen. D) None of above. Show Answer Correct Answer: C) Janet Yellen. 8. Who is in charge of Monetary policy within the Fed? A) Member banks. B) The Central Bank. C) Board of Governors. D) FOMC. Show Answer Correct Answer: D) FOMC. 9. Everything else held constant, when the federal funds rate is ..... the interest rate paid on reserves, the quantity of reserves demanded rises when the federal funds rate ..... A) Above; rises. B) Above; falls. C) Below; rises. D) Below; falls. Show Answer Correct Answer: B) Above; falls. 10. This monetary policy tool involves the buying and selling of government bonds A) Federal funds rate. B) Reserve requirement ratio. C) Open market operations. D) Discount rate. Show Answer Correct Answer: C) Open market operations. 11. A plan to increase the amount of money in circulation A) Open market operations. B) Contractionary policy. C) Monetarism. D) Expansionary policy. Show Answer Correct Answer: D) Expansionary policy. 12. What would increase the money supply? A) A decrease in consumer expenditure. B) An increase in bank lending. C) A decrease in investment. D) An increase in the rate of interest. Show Answer Correct Answer: B) An increase in bank lending. 13. Which of the following results should be included where the question mark appears in the illustration? A) Consumer spending. B) Unemployment. C) Inflation. D) Production. Show Answer Correct Answer: B) Unemployment. 14. The average interest rate estimated by each of the leading banks in London A) LIBOR. B) Official interest rate. C) LBR. D) None of above. Show Answer Correct Answer: A) LIBOR. 15. Who mints the coins in India? A) Ministry of Finance. B) Reserve Bank of India. C) Prime Minister's Office. D) Commerce and Industry Ministry. Show Answer Correct Answer: A) Ministry of Finance. 16. A tool of monetary policy. The Federal Reserve buys and sells bond/securities on the open market to influence the money supply. A) Open Market Operations. B) Reserve Requirements. C) Interest on Reserves. D) Discount Rate. Show Answer Correct Answer: A) Open Market Operations. 17. During a period of recession the best action would be A) Increase the money supply and lower interest rates. B) Decrease govt. spending and decrease taxes. C) Decrease the money supply and increase govt. spending. D) Increase interest rates and decrease the money supply. Show Answer Correct Answer: A) Increase the money supply and lower interest rates. 18. If Central Bank lower the required reserve ratio, it would A) Limit money supply. B) Increase money supply. C) Money supply remain unchanged. D) None of above. Show Answer Correct Answer: B) Increase money supply. 19. The federal government is attempting to encourage consumers and businesses to spend money, a fiscal policy BEST serving this purpose would be A) Decreasing taxes. B) Balancing the budget. C) Reducing the investment tax credit. D) Decreasing government spending. Show Answer Correct Answer: A) Decreasing taxes. 20. When the Federal Reserve controls the supply, availability, and cost of money to influence the economy, they are creating A) Fiscal policy. B) Monetary policy. C) A budget surplus. D) The national debt. Show Answer Correct Answer: B) Monetary policy. 21. If the Fed wants to increase the cost of loans, then it should adjust ..... A) Open Market Operations. B) The Reserve Ratio. C) The Discount Rate. D) None of above. Show Answer Correct Answer: C) The Discount Rate. 22. What happens to interest rates under a loose money policy? A) Increase. B) Decrease. C) Disappear. D) Stay the same. Show Answer Correct Answer: B) Decrease. 23. The primary decision making body of the Federal Reseve is the ..... A) Board of Governors. B) Congress. C) Federal Open Market Comittee (FOMC). D) None of above. Show Answer Correct Answer: C) Federal Open Market Comittee (FOMC). 24. A tool of monetary policy. The Federal Reserve pays a rate of return to banks who keep deposits at the Federal Reserve. A) Open Market Operations. B) Discount Rate. C) Interest on Reserves. D) Required Reserves. Show Answer Correct Answer: C) Interest on Reserves. 25. Which is not a characteristic of an independent central bank A) Communication without constraint. B) Dependent on political considerations. C) Ability to set objectives. D) Ability to formulate policy. Show Answer Correct Answer: B) Dependent on political considerations. 26. A tool of monetary policy. The Federal Reserve requires that banks keep a certain percentage of deposits on hand, and they cannot loan these funds. A) Open Market Operations. B) Interest on Reserves. C) Reserve Requirements. D) Discount Rate. Show Answer Correct Answer: C) Reserve Requirements. 27. This was created in 1913 to help stabilize the banking system in the United States A) The Atlanta Falcons. B) Federal Reserve System. C) Money. D) Mr. Pips Tortilla company. Show Answer Correct Answer: B) Federal Reserve System. 28. Which of the following is NOT one of the three parts of the FED? A) Fiscal Policy. B) District Banks. C) Board of Governors. D) Federal Open Market Committee. Show Answer Correct Answer: A) Fiscal Policy. 29. Monetary Policy is the Bank of Englands attempt to ..... A) Control the taxation rate. B) Control governments' spending. C) Control the UK Government's debt. D) Control the amount of money in circulation. Show Answer Correct Answer: D) Control the amount of money in circulation. 30. Which of the following is not a tool of Monetary policy? A) Corporate tax rate. B) Reserve requirement. C) Discount rate. D) Open market operations. Show Answer Correct Answer: A) Corporate tax rate. ← PreviousNext →Related QuizzesMonetary QuizzesEconomics QuizzesMonetary Policy Quiz 1Monetary Policy Quiz 2Monetary Policy Quiz 3Monetary Policy Quiz 4Monetary Policy Quiz 5Monetary Policy Quiz 7Monetary Policy Quiz 8Monetary Policy Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books