Federal Reserve System and Exchange Rate

Section 10 Study Questions (6.0 points) Answer each question fully. Complete sentences are not necessary. Lesson 1 (3.0 points) 1. What are the three tools the Fed uses to keep the economy stable? (1.0 points) 1. fund rate
2. discount rate
3. reserve requirement ratio

2. What is a recession? (0.5 points)

a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters. 3. What is domestic commerce? (0.5 points) Domestic commerce refers to the buying and selling of products within a particular country.

4. What is Congress? (0.5 points)

the national legislative body of a country. 5. What is monetary policy? (0.5 points)

Monetary policy is the decisions a government makes to control the supply of money, availability of money, and value of money. Lesson 2 (3.0 points) 1. What is antitrust law? (0.5 points)

antitrust law, which forbids agreements among competitors to fix prices or prevent fair competition 2. What is globalization? (0.5 points)

Globalization is the trend toward local, regional, or national economies becoming connected through communication, business, and trade. 3. What is free trade? (0.5 points)

A free trade zone (FTZ) is a specific class of special economic zone. They are a geographic area where goods may be landed, handled, manufactured or reconfigured, and reexported without the intervention of the customs authorities. 4. What is exchange rate risk? (0.5 points)

Exchange rate risk is the risk that investors and business people have when converting their money to a foreign currency to invest or do business. 5. What is a country’s trade balance? (0.5 points)

A country's trade balance is a comparison of its imports to exports. 6. What is an exchange rate? (0.5 points)

The exchange rate tells you how much one unit of currency is worth when converted to another currency.