Explain the basic structure of the Federal Reserve System and how it makes major policy decisions.
What will be an ideal response?
The Federal Reserve system consists of 12 banks spread all over the country but closely tied together. Each Federal Reserve Bank has its own board of directors and, to a limited extent, can set its own policies. Effectively, however, the 12 banks act in unison on major policy issues, with control of major policy decisions resting with the Board of Governors and the Federal Open Market Committee (FOMC), headquartered in Washington, D.C. The FOMC consists of the seven members of the Board of Governors, the president of the New York Federal Reserve Bank, and four other presidents of Federal Reserve Banks, who serve on the committee on a rotating basis. The FOMC makes most of the key decisions influencing the direction and size of changes in the money supply; their regular, closed meetings are accordingly considered important by the business community, news media, and government.
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When Jane Brown writes a $100 check to her nephew and he cashes the check, Ms. Brown's bank ________ assets of $100 and ________ liabilities of $100
A) gains; gains B) gains; loses C) loses; gains D) loses; loses
A matched sale-purchase transaction is also known as a
A) reverse repo. B) discount loan. C) put option. D) federal funds loan.
The shape of the long-run industry supply curve in a perfectly competitive industry is largely determined by: a. the shape of the short-run industry supply curve. b. the price of inputs as the industry expands
c. the price elasticity of market demand. d. the shape of the average fixed cost curve.
If net taxes were lowered from $5,000 to $1,000 . the marginal propensity to consume is 0.75, and autonomous consumption spending is $10,000 . by how much would consumption increase?
a. $3,000 b. $1,250 c. $7,500 d. $3,750 e. $750