/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q4. Which group votes on the open-ma... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 14: Q4. (page 301)

Which group votes on the open-market operations that are used to control the U.S. money supply and interest rates?

a. Federal Reserve System

b. the 12 Federal Reserve Banks

c. Board of Governors of the Federal Reserve System

d. Federal Open Market Committee (FOMC)

Short Answer

Expert verified

The correct answer is option d) Federal Open Market Committee (FOMC)

Step by step solution

01

Step 1. Explanation for the correct answer

The FOMC controls the money supply in the US economy by buying and selling bonds/securities through open market operations. In this way, it influences the inflation and interest rate in the economy. Thus, the FOMC is responsible for using open market operations to have an effective monetary policy in the US.

The Board of Governors, President of the Fed, and four of the 12 Federal Reserve banks are the members of the committee.

02

Step 2. Explanation for the incorrect options

The Federal Reserve System consists of all the bodies of the monetary system in the US. They have power in all, but the open market operations are decided by the FOMC only. So Federal Reserve System is the incorrect option.

Only 4 out of 12 banks have voting rights in the FOMC. So, option b is also incorrect. The Board of Governors has voting rights in the open market operations, but 4 Federal Reserve Banks and the president of the Fed also need to vote to make a decision. So option c is also incorrect.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

How is the chairperson of the Federal Reserve System selected? Describe the relationship between the Board of Governors of the Federal Reserve System and the 12 Federal Reserve Banks. What is the purpose of the Federal Open Market Committee (FOMC)? What is its makeup?

An important reason why members of the Federal Reserve鈥檚 Board of Governors are each given extremely long, 14-year terms is to:

a. insulate members from political pressures that could result in inflation.

b. help older members avoid job searches before retiring.

c. attract younger people with lots of time left in their careers.

d. avoid the trouble of constantly having to deal with new members

James borrows $300,000 for a home from Bank A. Bank A resells the right to collect on that loan to Bank B. Bank B securitizes that loan with hundreds of others and sells the resulting security to a state pension plan, which at the same time purchases an insurance policy from a company called AIG that will pay off if James and the other people whose mortgages are in the security can鈥檛 pay off their mortgage loans. Suppose that James and all the other people can鈥檛 pay off their mortgages. Which financial entity is legally obligated to suffer the loss?

a. Bank A

b. Bank B

c. the state pension plan

d. AIG

Which of the following is not a function of the Fed?

a. Setting reserve requirements for banks.

b. Advising Congress on fiscal policy.

c. Regulating the supply of money.

d. Serving as a lender of last resort.

What 鈥渂acks鈥� the money supply in the United States? What determines the value (domestic purchasing power) of money? How does the purchasing power of money relate to the price level? In the United States, who is responsible for maintaining money鈥檚 purchasing power?
See all solutions

Recommended explanations on Economics Textbooks

Taxation Economics

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.