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Quiz - Worksheets - Federal Open Market Committee - Monetary Policy - Economics bank - Virtual US Bank of Biz/ed

Monetary Policy - Federal Open Market Committee (FOMC)

Quiz - Inflation and interest rates - the work of the FOMC

1. Fill in the blanks in the boxes below to give a brief description of the monetary transmission mechanism.
(Type your answers)


2. If the FOMC raises interest rates, will the following variables be most likely to increase or decrease?

  • Consumption
    (Select one answer)

(a) * Increase
(b) * Decrease

   
  • Investment
    (Select one answer)

(a) * Increase
(b) * Decrease

   
  • Government expenditure
    (Select one answer)

(a) * Increase
(b) * Decrease

   
  • Exports
    (Select one answer)

(a) * Increase
(b) * Decrease

   
  • Imports
    (Select one answer)

(a) * Increase
(b) * Decrease

   
  • Aggregate demand
    (Select one answer)

(a) * Increase
(b) * Decrease

   
  • Aggregate supply
    (Select one answer)

(a) * Increase
(b) * Decrease

   
  • Economic growth
    (Select one answer)

(a) * Increase
(b) * Decrease

   
  • Unemployment
    (Select one answer)

(a) * Increase
(b) * Decrease

   
  • Inflation
    (Select one answer)

(a) * Increase
(b) * Decrease

   
  • Exchange rate
    (Select one answer)

(a) * Increase
(b) * Decrease

   
3. How many members of the FOMC are there?

(a) * 6
(b) * 8
(c) * 10
(d) * 12

   
4. How many members of the Board of Governors of the Federal Reserve serve on the FOMC?

(a) * 5
(b) * 6
(c) * 7
(d) * 8

   
5. How long does it typically take for an interest rate change to have its full effect on demand / production?

(a) * 6 months
(b) * 1 year
(c) * 18 months
(d) * 2 years

       
6. Congress has set an inflation target for the US Federal Reserve to meet.

(a) * True
(b) * False

   
7. How often does the Chairman of the Federal Reserve report to Congress about developments in monetary policy?

(a) * Once a year
(b) * Twice a year
(c) * Four times a year
(d) * No longer legally required to report to Congress

   
8. When was the FOMC formally set up?

(a) * 1913
(b) * 1930s
(c) * 1940s
(d) * 1960s