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1. In how many cities are Federal Reserve district banks located? - ✔✔12 2. monetary policy involves decreasing the money supply. - ✔✔Contractionary 3. Why does the Fed pay interest to banks? - ✔✔It is interest on money held in reserve. 4. Which best describes what a central bank uses monetary policy to do? - ✔✔steer the economy away from recession and toward growth 5. What is the full name of the US central bank, known as the Fed? - ✔✔the Federal Reserve Bank 6. Which of these is a banking activity of the Fed? - ✔✔storing money for banks 7. Which statement best describes how the Fed's use of open market operations affects banks? - ✔✔It affects banks' liquidity. 8. If the domino effect occurs as a result of changes in the money supply, what will most likely happen as an immediate result of banks having more money to lend? - ✔✔Interest rates will decrease
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