* Complete correctly the two short answer questions and one constructed response question. * Then get a Chromebook. Go to Icivics.org. Click play. Choose any game you’d like to play on the Icivics website. Great Review for the EOY on May 6 th.

* A) Define discount rate. * B) Then explain how the Federal Reserve uses the discount rate to control the money supply and growth and stability in the economy. * C) Provide one example.

* A) the interest rate the Fed charges on its loans * B) Control inflation through discount rate/money supply * C) Constructed response provides examples KEY

* When the Federal Reserve was started, it was to serve the function of a “lender of last resorts.” Do you think banks need the Federal Reserve to act as a lender of last resorts more often during good economic times or bad economic times? Explain

* Students should note that most likely banks would need the Fed as “lender of last resort” during bad economic times. If people and businesses cannot repay their loans, banks lose money and need assistance from the Fed in order to have the money on hand to pay interest and withdrawals to depositors. KEY

* The Federal Reserve uses monetary tools to regulate the money supply and maintain growth and stability in the U.S. economy. One of these tools is the adjustment of the discount rate it charges financial institutions on loans from the Federal Reserve. * Identify whether each of the effects stems form increasing or decreasing the discount rate. * Circle the increase or decrease arrow for each effect.

* People buy more houses * People pay more for loans * Inflation increases

* People buy more houses * People pay more for loans * Inflation increases KEY