ECONOMICS
FEDERAL RESERVE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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control the stock market.
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regulate the money supply.
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decrease consumer spending.
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challenge Presidential power.
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Detailed explanation-1: -Rates are established by each Reserve Bank’s board of directors, subject to the review and determination of the Board of Governors of the Federal Reserve System. The rates for the three lending programs are the same across all Reserve Banks.
Detailed explanation-2: -The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements, and the Federal Open Market Committee is responsible for open market operations.
Detailed explanation-3: -The most commonly used tool of monetary policy in the U.S. is open market operations. Open market operations take place when the central bank sells or buys U.S. Treasury bonds in order to influence the quantity of bank reserves and the level of interest rates.
Detailed explanation-4: -Expansionary monetary policy is a tool central banks use to stimulate a declining economy and GDP. The Federal Reserve has three expansionary monetary policy methods: lowering interest rates, decreasing banks’ reserve requirements, and buying government securities.