What are the two goals in the Fed's dual mandate?

Maximum employment and stable prices

Full employment and a strong dollar

Economic growth and financial stability

Stable prices and balanced federal budgets

Headline CPI with food and energy prices stripped out

The inflation rate for goods only, excluding all services

The inflation rate the Fed formally targets

A weighted average of CPI and PCE

The monthly jobs report is built from two separate surveys. What does each one produce?

The establishment survey gives the payroll count, and the household survey gives the unemployment rate

One counts private jobs and the other counts government jobs

One measures hiring and the other measures firing

One covers full time work and the other covers part time work

Payrolls come in far above consensus and stocks fall hard. What is the usual logic?

A hot labor market argues for tighter policy for longer, which raises the rate used to discount future earnings

Strong hiring means companies are about to report lower revenue

Traders assume the data will be revised away next month

Higher employment reduces consumer spending

How does quantitative tightening usually shrink the Fed's balance sheet?

The Fed lets maturing securities roll off without reinvesting the proceeds, up to a monthly cap

The Fed sells its whole portfolio into the market each month

The Treasury buys the bonds back at face value

The Fed writes the holdings down to zero over time

How is the Sahm rule constructed?

It triggers when the three month average unemployment rate rises half a percentage point above its low of the previous twelve months

It triggers when the yield curve inverts for three consecutive months

It triggers when GDP falls in two consecutive quarters

It triggers when jobless claims exceed 300,000 in a week

Why does a jump in long term yields usually hurt high growth stocks more than slow growing, cash generative ones?

Most of a growth company's value sits in cash flows many years out, and distant cash flows lose the most when the discount rate rises

Growth companies carry more floating rate debt by definition

Index funds are required to sell growth stocks when yields rise

Growth stocks pay larger dividends, which compete with bond coupons

Fed funds futures imply a year end policy rate of 3.60 percent while the median dot in the committee's projections sits at 3.90 percent. What does the gap say?

The market expects more easing by year end than the median policymaker is currently projecting

The Fed has already decided to cut and has told the market privately

Futures prices are wrong and will converge to the dots by definition

The dot plot is a binding commitment that the market is ignoring

Economy & the Fed quiz intermediate

The Fed and the Economy Quiz: 10 Questions

Test how well you can read a Fed decision and the data releases that shape it.

10 questions · about 7 minutes · instant explanations · nothing you answer leaves your browser

AI-assisted, reviewed and edited by John James. How we use AI

Sep 23, 2026 7 min read

About this quiz

Ten questions on the FOMC, the dual mandate, CPI, payrolls, GDP and quantitative tightening, including why strong data can send stocks lower. Each question comes with a short explanation of the right answer and a link to the guide that teaches it, so a wrong answer is a reading list rather than a dead end.

The quiz draws on the Economy & the Fed section. If you are new to the topic, start with the guides below, then come back and test yourself. Scores are calculated in your browser and are not stored or sent anywhere.

Frequently asked questions

Is this quiz free?

Yes. It costs nothing, asks for no email address and requires no account. Answers are checked in your browser and no record of your score is kept anywhere.

What score counts as passing?

Seven out of ten means you can follow a Fed day without needing the commentary explained to you. Below six, start with the pillar guide on how the Federal Reserve works and the calendar of releases that matter.

Will this help me predict rate decisions?

No, and nothing here is a forecast. It teaches you what the committee is looking at and how markets price expectations, which is a different and more durable skill than guessing the next move.

About this quiz

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