unit 5 econ Word Scramble

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Question	Answer
easy money	money policy is usually adopted in a time of economic recession.
What are the 3 goals of the Fed and monetary policy?	stable prices, full employment, sustainable economic growth
How does a monetary policy of low interest rates affect consumers?	It lowers savings rates
What are the 3 main characteristics of the Fed that make it unique to all other central banking systems in the world?	major independence from political authorities, relies on district banks to carry out banking policies developed on national level, member banks own stock in the Fed reserve banks their districts
If the Federal reserve adopts an expansionary monetary policy,	interest rates fall and credit is abundant
The Federal Reserve System controls the size of the...	money supply
A short-term monetary policy action would MOST LIKELY.	lower interest rates
By rgulating the money supply and the interest rates charged for credit, the Fed influences	aggregate demand
What would MOST LIKELY happen if the Federal Reserve System lowered interest rates?	Unemployment would be reduced in the short run
The Fed usually adopts a ___money policy when they begin to fear there is too much money in circulation and it could lead to inflation.	tight
How might monetary policy be used to combat inflation fears?	The Federal Reserve might raise interest rates
Which of these would deter inflation?	a decrease in the price of securities
Which has LEAST LIKELY been the historical goal of the Federal Reserve's monetary policy?	Decreasing the national debt
What are the biggest challenges that the Fed faces when forming and implementing a monetary policy?	Collecting all of the data needed for analysis and action can take months, Time-consuming discussions about the data must take place, time passes before the impact of the monetary policy is felt through the economy
What are the 2 big reasons the Fed puts new money into circulation?	Replace old and worn-out notes and To increase amount of money in circulation by expanding the pool of cash that the Federal Reserve banks can loan
During a recession, what must happen to interest rates to spur economic growth?	drop
What would be reasonable monetary policy during a period of high inflation?	reduce the money supply
which of there is MOST LIKELY to occur after the government increases taxes?	consumer spending increase
If the federal government wants to encourage businesses and consumers to spend more money, it would MOST LIKELY...	decrease tax rate
which of these actions of the Federal Reserve can slow economic growth?	the Federal Reserve increases the discount rate, which causes interest rates to rise and people to save rather than to spend
which pairs of operations BEST fit with fiscal policy?	government spending and taxation
what is the effect of an expansionary fiscal policy upon an economy with an increasing budget deficit and growing national debt?	increased deficit spending and increasing or growing national debt
setting the discount and interest rates, establishing reserve requirements for banks, buying and selling U.S. government securities all are ways in which the Federal Reserve system can	regulate the money supply
State governments often decide to place a "sin tax" on specific products or goods, like, alcohol and tobacco. Which rationale is LEAST LIKELY to encourage governments to adopt a "sin tax"?	"Sin taxes" disproportionately affects lower income groups
What consumer behavior is the Federal reserve board trying to encourage when it implements a loose monetary policy?	decreased saving and increased spending
which action by the Federal Reserve would help to slow down rising inflation?	sell bonds
Many local governments rely on sales taxes for much of their revenue. When they have budget shortages, why do they not simply raise rates as needed?	higher rates could drive businesses to other countries
how will a contractionary fiscal policy affect a budget deficit?	shrink the deficit
the economy is experiencing rapid inflation , pushing above 9%, which fiscal policy action should the government implement in an attempt to fix this problem?	raise taxes
what is the name of the "central bank" in the United States?	the Federal Reserve
the Federal Reserve has kept interest rates very low. Some might argue this could lead to	inflation
the Federal Reserve institutes a tight monetary policy in order to reign in inflation. What is likely consequence of such actions	the unemployment rate will rise
the process by which the Federal Reserve controls the supply, availability, and cost of money in order to keep the economy stable is	monetary policy
when the Federal Reserve sells government securities on the open market, what effect does this action have on the nation's money supply and interest rates?	money supply decreases and interest rates increase
fearing a recession the government decides to give citizens a tax rebate check to buy Christmas gifts. What is possible outcome of this action?	higher rates of inflation
the federal government uses government spending and tax rates to help control recessions and encourage economic activity. This is called	fiscal policy
you want a new truck. How can the Federal Reserve raising of the discount rate affect your decision to purchase the truck?	it will raise interest rates and make your truck payment higher

Created by: Terminal98