General Awareness: Monetary Policy Quiz

1. Which of these is NOT a monetary policy tool?

a) Discount Rate
b) Open Market Operations
c) Balance Accounts
d) Reserve Requirements

The correct answer is c) Balance Accounts

2. The goals of monetary policy do NOT include the promotion of _________________

a) Maximum employment
b) Low Taxes
c) Stable Prices
d) Moderate long-term interest rates

The correct answer is b) Low Taxes

3. Inflation is a sustained increase in the general level of __________.

a) Accounts
b) Income
c) Prices
d) Profit

The correct answer is c) Prices

4. Federal Reserve Board of Governors members are appointed by the ____________ and confirmed by the ______________.

a) President; Senate
b) Treasury; Congress
c) Federal Reserve Presidents; Treasury
d) Public; House of Representatives

The correct answer is a) President; Senate

5. Federal Reserve Board of Governors members serve __________ terms to help insulate them from political influence.

a) 14 years
b) 7 years
c) Lifetime
d) 25 years

The correct answer is a) 14 years

6. Through open market operations, the Federal Reserve buys and sells government securities to influence the supply of bank reserves. When the Fed wants to increase reserves, it does what?

a) Buys Securities
b) Sells Securities
c) Nothing

The correct answer is a) Buys Securities

7. Monetary policy refers to what the Federal Reserve does to influence the amount of __________ and __________ in the U.S. economy.

a) Currency and gold reserves
b) Money and credit
c) Taxes and revenue
d) Interest and debt

The correct answer is b) Money and credit