Question

1) The Federal Reserve Board of Governors has the formal authority to: I. Officially set the discount rate II. Establish the reserve ratio required for all depository intermediaries III. Set the fed funds rate of interest Select one:

A. I only

B. I and II only

C. I and III only

D. II and III only

E. I, II, and III

2)

The designers of the Federal Reserve Act of 1913 intended the Fed to have one primary monetary tool:

Select one:

A. setting margin requirements.

B. discounting.

C. open market operations.

D. setting reserve requirements.

Answer 1

Q1: B

The discount rate and reserve ratio is determined by The Federal Reserve Board of Governors. The federal funds rate is determined by the FMC.

Q2: B

The designers of the Federal Reserve Act of 1913 intended the Fed to have one primary monetary tool which was discounting. OMO and reserve/margin requirements was not part of the role.