Question

2. The structure of the Federal Reserve Aa Aa Which of the following are functions of the Federal Reserve? Check all that apply. Regulating the money supply Lending money directly to households and firms Setting the interest rate on home mortgages and auto loans Setting reserve requirements Issuing currency Which of the following are true of using money supply targets to achieve monetary policy goals? It tends to emphasize low inflation over low unemployment due to political pressures The Fed cannot target the money supply directly, but rather must use intermediate targets to control it It is aimed primarily at stable prices rather than rising output It works best during periods of stable money velocity

Answer 1

Answer

Which of the following are functions of the Federal Reserve? Check all that apply. Regulating the money supply Lending money directly to households and firms O Setting the interest rate on home mortgages and auto loans ✓ Setting reserve requirements Issuing currency

The Federal reerve is the soul authority in priting currency. It also functions to regulate reserve requirements on deposits in commercial banks. As it also helps in regulating money supply.

Ø It is aimed primarily at stable prices rather than rising output

By encouraging and restricting the money supply it can combat interim shirt term inflations.

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