Unit 5 FRQ
1.a. Monetary policy states that controlling the money supply i the key to controlling the
economy. It is carried out by the Federal Reserve System(the Fed). The Fed regulates monetary
policy through open market operations, reserve requirements and influence over interest rates.
Fiscal policy regulates revenues and expenditures through the Federal budget. It is determined by
congress and the president and is carried out through legislation.
1.b. Fiscal policy is influence through, the Presidential business-cycle. This means it is
manipulated by executive/legislative branches for short run advantages offering support for
upcoming elections.
1.c. The Fed operates fairly independently because they do not have to deal with reelection. They
are appointed by the President but their terms exceed his Presidency. This means that they have
the ability to do what is best for our economy even without the public’s approval.
