Question

The Federal Reserve

a. is responsible for conducting the nation’s monetary policy, and it plays a role in regulating banks.
b. is responsible for conducing the nation’s monetary policy, but it plays no role in regulating banks.
c. is not responsible for conducting the nation’s monetary policy, and it plays a role in regulating banks.
d. is not responsible for conducing the nation’s monetary policy, and it plays no role in regulating banks.

Answer 1

Option (a) is correct.

Step-by-step explanation:

The federal reserve is the central bank of United States. It is responsible for all the changes occured in a nation's monetary policy and it regulates all the banks operates in a nation.

Federal reserve uses various monetary policy tools to control the money supply in an economy. Some of the tools are as follows:

(i) Cash reserve ratio (CRR)

(ii) Statutory liquidity ratio

(iii) Open market operations(OMO)

(iv) Repo rate

(v) Reverse repo rate

(vi) Bank rate

Functions of Fed:

(i) Regulation of financial institutions

(ii) Banker's bank

(iii) A lender of last resort

(iv) Implement monetary policy