ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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regulates commercial banks
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sets & controls budget
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buys/ sells bonds
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controls interest rates
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Detailed explanation-1: -Remember, they can’t set federal funds or prime interest rates, but they can bend them to their will through OMO. The Fed buying back government bonds from banks leaves more money for banks to play with while selling them means banks have to be more cautious about lending out their reserves.
Detailed explanation-2: -Financial institutions, financial markets, and financial products in the United States are largely overseen by federal agencies and subject to federal laws. The major exception is the insurance industry, which is regulated primarily by the individual states.
Detailed explanation-3: -The Federal Reserve sets U.S. monetary policy to promote maximum employment and stable prices in the U.S. economy.
Detailed explanation-4: -Together with other agencies in the federal government, the Federal Reserve supervises the banking industry and makes rules that banks must follow. The Fed also oversees electronic payment systems and processes the checks people write.