Question

1) The mission of the Federal Reserve Bank fits best with which of these statements?

a) The mission of the Fed is to be a profit-generating center.

b) The mission of the Fed is to regulate product markets.

c) The mission of the Fed is to serve as the banking industry's private bank.

2) If the public and community loses trust in banks, that lack of trust could adversely affects the entire U.S. financial system if depositors become reluctant to leave their savings in banks. In order to keep this type of financial crisis from happening, the Fed

a) makes as needed short term emergency loans, by acting as the lender of last resort.

b) decreases the money supply as acting lender of last resort.

c) guides and regulates private deposit insurance programs to cover insolvent bank losses.

3) Which of the following is considered a Federal Reserve monetary policy tool?

a) printing money

b) setting household deposit requirements

c) varying the discount rate

Answer 1

a) "C"

the Fed acts as a private bank for all the bank in the US market, the answer is "C" The mission of the Fed is to serve as the banking industry's private bank.

b) "A"

Makes a needed sort term emergency loans that is the lender of last resort function of the Fed.

c) "C"

the Fed can change the discount rate in the market to manage the money supply in the market. that is part of the monetary policy.