ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The Board of governors
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Congress and the President
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The 12 District banks
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The Federal Open Market Committee
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Detailed explanation-1: -To fulfill its mandate, the Fed’s most important lever is the buying or selling of U.S. Treasury bonds in the open market to influence banking reserves and interest rates. For instance, the Fed’s purchase of bonds puts more money into the financial system and thus reduces the cost of borrowing.
Detailed explanation-2: -Traditionally, the Fed’s most frequently used monetary policy tool was open market operations.
Detailed explanation-3: -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.
Detailed explanation-4: -The FOMC holds eight regularly scheduled meetings per year. At these meetings, the Committee reviews economic and financial conditions, determines the appropriate stance of monetary policy, and assesses the risks to its long-run goals of price stability and sustainable economic growth.