MC QUESTIONS. TRUE/FALCE 11. THE MAIN SOURCE WITH FEDERAL RESERVE “INDEPENDENCE” IS THAT IT IS SELF...

MC QUESTIONS. TRUE/FALCE

11. THE MAIN SOURCE WITH FEDERAL RESERVE “INDEPENDENCE” IS THAT IT IS SELF FUNDING. THIS MEANS THAT THE FEDERAL RESERVE GETS MONEY TO OPERATE FROM A. INTEREST ON ITS PORTFOLIO OF GOVERNMENT AND MORTGAGE -BACKED SECURITIES. B ANNUAL MEMBERSHIP FEES PAID BY MEMBER COMMERCIAL BANKS .C SELLING GOVERNMENT SECURITIES FROM THE OPEN MARKET PORTFOLIO D. SPECIAL APPROPRIATIONS FROM CONGRESS

12. WHICH OF THE FOLLOWING IS NOT RESPONSIBILITY OF THE FEDERAL RESERVE A. EXAMINES BANKS B. ISSUES NEW CURRENCY AND COINS C. HOLDS DEPOSITS OF MUNICIPAL GOVERNMENTS DO. ALL OF THESE ARE FEDERAL RESERVE RESPONSIBILITY

13. THE FEDERAL OPEN MARKET COMMITTEE (FOMC) IS COMPOSED OF THE 7 MEMBERS OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE, WHO CAN VOTE TO CHANGE MONETARY POLICY AND THE 12 RESERVE BANK PRESIDENTS, WHO CAN ADVISE THE GOVERNORS, BUT CANT VOTE ON PROPOSED CHANGES TO MONETARY POLICY

Expert Solution

Answer 11 . The main source with federal reserve " independence" is that it self functioning. This means that the federal reserve get money to operate interest on the portfolio of the government and mortgage backed securities. It means that fed has taken money from the interest they get from the purchase of the securities in the market. As we know governmet has invested into different securities so they taken interest from them and that interest is the money that utilised by the fed government.

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Answer 12 The main responsibility of the federal reserve are to see the functioning of the bank, issued new currencies and coins. They are not hold deposits of muncipal government at large. There responsibility is not to hold deposits of muncipal government but they take deposits of commerical bank .

Answer 17 : The statement is False as the federal open market committee is composed of 7 members of board of governers of the federal reserve , the president of federal reserve bank and four of the remaining in eleven reserve bank presidents . The 7 members of board of government cannot vote in the meeting and other are vote and decision is taken place.

Rahul Sunny answered 1 year ago

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