How does the discount rate primarily affect the money supply?

It influences the amount banks borrow from the Fed, thus impacting the money supply.

Which of the following statements best describes fractional reserve banking and the role of the bank reserve requirement?

Banks loan out most deposits but must keep a fraction in reserve; the reserve requirement influences lending capacity.

Grade 11th Grade · Social Studies · 45 min

I can differentiate between fiscal and monetary policy and their potential impacts on the economy.

CrashCourse · 9:19

Monetary and Fiscal Policy: Crash Course Government and Politics #48

3 key concepts

1
Monetary policy refers to how the government regulates the amount of money in circulation, and the primary task for this is given to the Federal Reserve System.
2
Fiscal policy refers to the government’s ability to raise taxes and spend the money it raises.
3
Because Americans are generally reluctant to raise taxes and the government has a limited ability to cut spending, monetary policy becomes its major lever in broad-based macroeconomic policy.

8 questions · Multiple choice & Short answer & True/false

Quick comprehension check

“Explain the key difference between fiscal and monetary policy. Give one example of how each policy could be used to address a recession.”

Get all 3 ready-to-use resources:

Teacher GuideComplete lesson plan

Student DocPrintable student handouts

SlidesReady-to-use presentation