The Federal Reserve has the power to __________________. Note: Please select two correct answers. carry out...

The Federal Reserve has the power to __________________.

Note: Please select two correct answers.

carry out monetary policy through open market operations

lend money directly to its member commercial banks

act as a lender of first resort

open checking and savings accounts for individuals

Solutions

Expert Solution

Answer: Option 'A' and 'B' are the correct answers.

The Federal Reserve Bank has power to carry out monetary policy through open market operations. For archiving the target rate the federal Reserve Bank sell and buy government securities.

The Federal Reserve Bank usually lend money directly to its member commercial banks or other eligible institution that are experiencing financial difficulty or are considered highly risky or near collapse as a lender of last resorts.

The Federal Reserve Bank also provide loans to Banks and other eligible institution as lender of first resort as well. During the financial crisis in 2008 The Federal Reserve Bank become lender of first resort to the financial institution that are relying on central bank to accelerate their profit.

People can't open checking and saving account in Federal Reserve Bank. Finacial aid by the Federal Reserve Bank is provided to banks and government entities only.

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Rahul Sunny answered 1 year ago

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