Monetary Policy Basics
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Questions and Answers

What is the primary purpose of monetary policy?

  • To regulate foreign exchange rates
  • To control fiscal policy decisions
  • To manage money supply and interest rates (correct)
  • To increase government spending

    • Which institution is responsible for implementing monetary policy in the United States?

  • U.S. Department of the Treasury
  • Federal Reserve Bank (correct)
  • Securities and Exchange Commission
  • Federal Deposit Insurance Corporation

    • What type of tools does the Federal Reserve use in monetary policy?

  • Open market operations and interest rate adjustments (correct)
  • Wage restrictions and price controls
  • Trade tariffs and subsidies
  • Taxation and government spending

    • How does the Federal Reserve typically respond to inflation using monetary policy?

    <p>By raising interest rates</p> Signup and view all the answers

    What effect does increasing the money supply generally have on interest rates?

    <p>It typically decreases interest rates</p> Signup and view all the answers

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