Title: QUIZ: Monetary Policy -- Economic Lowdown Audio Series
Course: Andria Testing FRE2 > Section: Monetary Policy -- Economic Lowdown Audio Series

Q: What is the central bank of the United States?
- The U. S. Treasury
- The Federal Reserve
- The Bank of the United States
- United States Mint
A: The Federal Reserve

Q: To meet the requirements of the dual mandate, the Federal Reserve must promote which of the following?
- Price stability and rising stock market values
- Maximum employment and rising stock market values
- Price stability and maximum employment
- Maximum economic growth and maximum employment
A: Price stability and maximum employment

Q: What generally happens when the economy contracts?
- Unemployment rate rises
- Unemployment rate falls
- Inflation rises above the Fed’s 2% objective
- Inflation remains at 2%
A: Unemployment rate rises

Q: True or False: It is easier to achieve maximum employment in an economy with price stability.
- True
- False
A: True

Q: Lower interest rates ________ the cost of borrowing money.
- increase
- decrease
- are not related to
- have an unpredictable effect on
A: decrease

Q: Why might the Fed lower interest rates during a recession?
- To fight inflation
- To encourage saving
- To encourage consumer spending and business investment
- To balance the needs of consumers and producers
A: To encourage consumer spending and business investment

Q: How does an increase in consumer spending and business investment affect employment?
- Businesses respond to the increased demand for goods and services by hiring more workers in order to increase production.
- Businesses respond to the decreased demand for goods and services by hiring more workers in order to increase production.
- Businesses respond to the decreased demand for goods and services by hiring fewer workers in order to decrease production.
- Businesses respond to the increased demand for goods and services by hiring fewer workers in order to decrease production.
A: Businesses respond to the increased demand for goods and services by hiring more workers in order to increase production.

Q: Inflation occurs when  __________.
- the rate of saving increases
- banks print more money
- the demand for goods and services in an economy decreases
- spending exceeds the economy’s ability to produce goods and services
A: spending exceeds the economy’s ability to produce goods and services

Q: If the economy is experiencing high inflation, the Fed will likely  __________.
- decrease employment
- lower interest rates
- raise interest rates
- increase employment
A: raise interest rates

Q: What is the Fed’s target for the inflation rate?
- 0%
- 1%
- 2%
- The Fed does not have a target for the inflation rate.
A: 2%