ECONOMICS
FEDERAL RESERVE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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to supply banks with enough money so they do not run out during the business day.
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to encourage the President to appoint members to the FOMC.
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to go to the Reserve Banks and check their records and accounts.
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to keep the economy healthy by managing the country’s monetary supply.
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Detailed explanation-1: -It is responsible for managing monetary policy and regulating the financial system. It does this by setting interest rates, influencing the supply of money in the economy, and, in recent years, making trillions of dollars in asset purchases to boost financial markets.
Detailed explanation-2: -The Fed sets interest rates. Lower rates make it easier for people to borrow and keep money circulating and fueling economic growth. And vice versa. Example: because of the pandemic, the Fed held interest rates near zero in the hopes that cheaper borrowing would help keep consumers spending.
Detailed explanation-3: -Today, the Fed uses its tools to control the supply of money to help stabilize the economy. When the economy is slumping, the Fed increases the supply of money to spur growth. Conversely, when inflation is threatening, the Fed reduces the risk by shrinking the supply.
Detailed explanation-4: -The Federal Reserve conducts the nation’s monetary policy by managing the level of short-term interest rates and influencing the availability and cost of credit in the economy. Monetary policy directly affects interest rates; it indirectly affects stock prices, wealth, and currency exchange rates.