ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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individual deposits are invested with high risk
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private banks follow the rules set by the reserve banks.
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Either A or B
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None of the above
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Detailed explanation-1: -Supervising and Regulating Financial Institutions and Activities. The Federal Reserve promotes the safety and soundness of individual financial institutions and monitors their impact on the financial system as a whole.
Detailed explanation-2: -The correct answer is B. Monetary policy is established by the Federal Open Market Committee. The Federal Reserve System has twelve Federal Reserve banks whereby there is one represented in each Federal Reserve districts.
Detailed explanation-3: -The Federal Reserve’s supervision activities include examinations and inspections to ensure that financial institutions operate in a safe and sound manner and comply with laws and regulations. These include an assessment of a financial institution’s risk-management systems, financial conditions, and compliance.
Detailed explanation-4: -Most important policy-making body for controlling the growth of the money supply.