Wise Practice Test Exam Questions With 100% Correct Answers 2024/2025

Wise Practice Test Exam Questions With 100% Correct Answers 2024/2025 Which of the following does the Federal Reserve use to regulate the nation's money supply? A. Fiscal policy B. Proposing legislation C. Monetary policy D. Regulations - answerC Reason The Federal Reserve uses monetary policy to regulate the nation's money supply. Monetary policy is directed at expanding or contracting the supply of money and credit in the U.S. economy. In theory, if there is too little money in circulation, consumers will spend less, interest rates will be high, and unemployment will rise. In this situation, the Fed can deliberately increase the amount of money in circulation, leading to lower interest rates, increases in consumer spending, and higher employment rates. If there is too much money in circulation, however, prices rise and the value of the dollar decreases (inflation). Money in the United States includes: A. Gold B. Checking account balances on which checks can be drawn C. Barter D. Diamonds - answerB Reason The total amount of money in the United States, termed the money supply, consists of coins, paper currency, checking account balances on which checks can be drawn, savings deposits, and time deposits such as CDs and money market funds. This measure of money, known as M2, is followed by the Federal Reserve as a key indicator of economic well being. Scott just got an ATM card to use and must choose a PIN (Personal Identification Number). How should he select a PIN that will give him maximum protection against anyone else being able to find out what the PIN is?