Understanding the Impact of Federal Reserve System on the Economy Quiz

The Federal Reserve controls the money supply and interest rates to maintain economic stability.

The rate at which banks borrow from the Federal Reserve is called the federal funds rate.

New York is located in the Second District of the Federal Reserve.

Taxation is not a primary tool of monetary policy used by the Federal Reserve.

The primary responsibility of the Federal Reserve Bank of New York within the Federal Reserve System is conducting open market operations.

The Federal Reserve uses the discount rate as a tool to influence the money supply.

Fractional reserve requirement is the percentage of deposits that banks must hold in reserve as mandated by the Federal Reserve.

The FOMC is responsible for conducting monetary policy within the Federal Reserve System.

To address inflation concerns, the Federal Reserve may increase the discount rate.

The primary purpose of the discount rate is to discourage excessive borrowing by banks.

The term 'dual mandate' in the context of the Federal Reserve refers to maintaining stable prices and achieving maximum employment.

The Federal Reserve influences interest rates by buying and selling government securities in the open market.

The dual mandate of the Federal Reserve is to maintain stable prices and achieve maximum employment.

The Federal Reserve directly controls the money supply through open market operations.

The Federal Reserve influences long-term interest rates by conducting open market operations with long-term securities.

The Federal Reserve closely monitors the Consumer Price Index (CPI) to gauge inflation.

The process by which the Federal Reserve buys securities to inject money into the economy is called quantitative easing.