Question

49. Which body is responsible for formulating U.S. monetary policy? (a) the Federal Reserve Bank of New York; (b) the Federal Open Market Committee; (c) the Secretary of the Treasury; (d) the International Monetary Fund.

50. One characteristic of the U.S. central bank is its: (a) control by the White House; (b) acceptance of appropriations from the Congress; (c) independence within the government; (d) dominance by large banks on its boards of directors.

51. Which of the following is not a primary role of the Federal Reserve? (a) to work with the president’s administration directly on the setting of fiscal policy; (b) to serve as a bank for banks; (c) to maintain the nation’s payments system; (d) to participate in supervision and regulation of banking institutions.

52. Suppose that the country of Jeteria has a marginal propensity to consume of 90% and a tax rate equal to 4/9. If autonomous spending in Jeteria increases by $100, national income could rise eventually, all other things remaining the same, by up to: (a) $100; (b) $200; (c) $1,800; (d) there is not enough information to answer this question.

Answer 1

Question 49 - Option B - The Federal open market committee.

The Federal Reserve is a central bank of United States. Congress created the fed in 1913 to help promote a safe and sound monetary and financial system for United States. The fed also includes 12 regional Federal Reserve Banks located in cities throughout the country.

Monetary policy decisions at the fed are made by the Federal Open Market Committee.

Question 50 One characteristic of the U.S. central bank is its: option C - Independence within government

Because fed is not regulated or controlled by the government. The board of directors are appointed by the president but the policies which are made by fed do not get approved or any clearance from government.

Question 51. Which of the following is not a primary role of the Federal Reserve - (a) to work with the president’s administration directly on the setting of fiscal policy

Because fed is a Independent Organization. The government don't have any control over fed. So work with the president's administration directly on the setting of fiscal policy is not a primary role of the fed. And all the remaining options are the primary role of the fed.