Section 3

Question 0

Open market operations

Answer 0

Are the sales and purchase of federal government securities.

Question 1

Monetary policy

Answer 1

Includes the Fed’s actions that change the money supply in order to influence the economy.

Question 2

Federal funds rate (FFR)

Answer 2

Is the interest rate that banks charge one another to borrow money.

Question 3

Discount rate

Answer 3

Is the interest rate that the Fed charges when it lends money to other banks.

Question 4

Prime rate

Answer 4

Is the interest rate that banks charge their best customers.

Question 5

Expansionary monetary policy

Answer 5

Is a plan to increase the money supply.

Question 6

Contractionary monetary policy

Answer 6

Is a plan to reduce the money supply.

Question 7

Easy-money policy

Answer 7

Is another name for expansionary monetary policy.

Question 8

Tight-money policy

Answer 8

Is another name for contractionary monetary policy.

Question 9

Monetarism

Answer 9

Is a theory that holds that rapid changes in the money supply cause economic instability.