Money + FED Reserve

Question 1

What is money:

Answer 1

Medium exchange that is accepted as payment of debts, a claim on something that has value.

Question 2

Characteristics of money:

Answer 2

-Must be accepted as payment
-Must be divisible
_Must be portable
_Must have a reasonable store of value

Question 3

What is the FEDERAL RESERVE

Answer 3

-The nations bank
-Overseas all other banks in the country
-All checks cleared through the FED
-The FED controls the money supply and interest rates

Question 4

How does the FED control money?

Answer 4

Through different monetary policies

Question 5

Monetary policies:

Answer 5

Actions taken by the FED to achieve economic growth, stabilize prices, and provide full employment

Question 6

Two common policies used by the FED are

Answer 6

Easy money: encourages
Tight money: discourages

Question 7

Reserve Requirement:

Answer 7

% of every deposit that must be set aside as a legal reserve

Question 8

Discount rate

Answer 8

The interest rate the FED charges banks to borrow money from it

Question 9

Open market Operations

Answer 9

The buying and selling of US government securities

Question 10

How would the FED use these tools:

Answer 10

Inflations: TIght money
Deflation: Easy Money