In: Economics
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
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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