EOC Flashcard Set #9 COPY

Question 1

Used by banks to loan money to consumers

Answer 1

Prime Rates

Question 2

Used when the Federal Reserve makes a loans to private banks or when commercial banks lend to each other

Answer 2

Discount Rate

Question 3

The Central Bank responsible for monetary supply is known as the ___________.

Answer 3

Federal Reserve (The FED)

Question 4

Amount that must be paid to borrow money.

Answer 4

Interest rate

Question 5

With higher interest rates:
1. _________ inflation
2. _________ borrowing of money
3. _________ costs for those who buy
4. _________ buying of cars and houses
5. _________ economic growth

Answer 5

1. Lower, 2. Less, 3. Higher
2. Less, 5. Less

Question 6

With lower interest rates:
1. _________ inflation
2. _________ borrowing of money
3. _________ costs for those who buy
4. _________ buying of cars and houses
5. _________ economic growth

Answer 6

1. Higher, 2. More, 3. Lower,
2. More, 5. More

Question 7

Higher reserve requirements causes banks to keep (1) _____ money on hand, (2) ______ lending/borrowing, and (3) ______ economic growth.

Answer 7

1. more
2. less
3. slower

Question 8

Lower reserve requirements causes banks to keep (1) _____ money on hand, (2) ______ lending/borrowing, and (3) ______ economic growth.

Answer 8

1. less
2. more
3. more

Question 9

5 Key Objectives of the Federal Reserve overseeing nation’s system of money and credit:

Answer 9

1. Print money
2. Control amount of available money
3. Adjust long term interest rates
4. Keep prices stable
5. Promote employment

Question 10

The Federal Reserve policy that attempts to manage the economy by controlling the money supply and the interest rates.

Answer 10

Monetary Policy

Question 11

Lower interest rates and lower reserve requirements, lower taxes is __________ Fiscal Policy.

Answer 11

Expansionary Fiscal Policy

Question 12

Raising interest rates and higher reserve requirements, raising taxes is __________ Fiscal Policy.

Answer 12

Contractionary Fiscal Policy

Question 13

Federal Reserve is also known as the ___________ Bank

Answer 13

Central

Question 14

The Federal Reserve sets _______ rates, money that is charged to banks to borrow money from the Federal Reserve.

Answer 14

discount

Question 15

The Federal Reserve controls the amount of ________ in circulation.

Answer 15

money

Question 16

The Federal Reserve also sets _____________, which is how much money banks must keep on hand.

Answer 16

Reserve Requirements

Question 17

____________ interest rates and reserve requirements lead to less borrowing, less spending, less economic growth and less demand for things like homes, cars and less inflation

Answer 17

Higher

Question 18

____________ interest rates and reserve requirements lead to more borrowing, more spending, more economic growth and more demand for things like homes, cars and more inflation.

Answer 18

Lower

Question 19

___________ are money the government collects from people.

Answer 19

Taxes

Question 20

___________ taxes reduce demand, shrinks the economy, causes less spending, and higher unemployment

Answer 20

Higher

Question 21

___________ taxes increase demand, grows the economy, causes more spending, and lower unemployment

Answer 21

Lower