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MCAP, Maryland Comprehensive Assessment Program

This page shows a list of test questions in the American Government public release collection at MSDE. American Government
Unit "Economic Policy," Topic "Monetary Policy"

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Expand All Official Practice Test

This is a multiple choice question that allows you to select only one option.

Which of these government actions is designed to lower inflation?

  1. A.
    hiring more government workers
  2. B.
    increasing government loans
  3. C.
    selling government securities
  4. D.
    increasing government spending

This is a multiple choice question that allows you to select only one option.

Which of these sets monetary policy in the United States?

  1. A.
    Federal Reserve System
  2. B.
    Secretary of the Treasury
  3. C.
    Senate Budget Committee
  4. D.
    Federal Trade Commission

This is a multiple choice question that allows you to select only one option.

Which of these actions would the Federal Reserve most likely take to help end a recession?

  1. A.
    print more currency
  2. B.
    reduce the interest rate
  3. C.
    sell government securities
  4. D.
    increase the reserve requirement

This is a multiple choice question that allows you to select only one option.

Which of these consumer activities is most influenced by the Federal Reserve?

  1. A.
    getting a home mortgage
  2. B.
    purchasing a discount airplane ticket
  3. C.
    using a prescription drug
  4. D.
    reading nutritional labels on foods

This is a multiple choice question that allows you to select only one option.

Read the headline below.

A newspaper headline reads, Continued Rise in Unemployment Rate Leads Federal Reserve to Increase Money Supply.

Which of these best explains the reason for the Federal Reserve's action?

  1. A.
    to encourage consumers to stop spending money
  2. B.
    to make it easier for businesses to borrow money to expand
  3. C.
    to give businesses incentives to decrease their production of goods and services
  4. D.
    to provide more funds for the federal government to use for entitlement programs

This is a multiple choice question that allows you to select only one option.

Which of these is a responsibility of the Federal Reserve System?

  1. A.
    collecting taxes
  2. B.
    lending money to individuals
  3. C.
    controlling the money supply
  4. D.
    approving government budgets

This is a multiple choice question that allows you to select only one option.

Which of these is a function of the Federal Reserve?

  1. A.
    to set the level of income tax
  2. B.
    to establish export laws
  3. C.
    to regulate the money supply
  4. D.
    to pass spending legislation

This is a multiple choice question that allows you to select only one option.

Study the chart below.

INSTRUMENTS OF THE FEDERAL RESERVE SYSTEM
Instrument Function
Interest Rate Interest rate charged to banks by other banks or the Federal Reserve
Reserve Requirements Requirements on the amount of funds banks must hold in reserve against deposits
Open Market Operations The buying and selling of United States government securities in the open market

Based on the chart, which of these would be a result of open market operations by the Federal Reserve System?

  1. A.
    interest rates on loans decrease
  2. B.
    new types of currency are created
  3. C.
    the operating hours of banks change
  4. D.
    the size of the money supply changes

This is a test question that allows you to enter extended text in your response.

Read the information and use it to answer the constructed-response question.

In December 2007 the U.S. unemployment rate was 5 percent. By June 2009 the U.S. unemployment rate was 9.5 percent.

  • Describe the role of the Federal Reserve.
  • Explain how the Federal Reserve could use monetary policy to address the economic changes described in this information.
  • Include details and specific examples to support your answer.