Question

Which of the following are true statements?

A) The FOMC usually meets every six weeks to set monetary policy.
B) The FOMC issues directives to the trading desk at the New York Fed.
C) Designers of the Federal Reserve Act did not envision the use of discount lending as a monetary policy tool.
D) All of the above are true statements.
E) Only A and B of the above are true statements.

Answer 1

The true statements regarding the FOMC are that it usually meets every six weeks to set monetary policy (A), and it issues directives to the New York Fed's trading desk (B). Statement C is not supported by the information provided, making E (Only A and B are true) the correct answer.

Step-by-step explanation:

In answering which statements are true regarding the Federal Open Market Committee (FOMC) and its functions: A) The FOMC usually meets every six weeks to set monetary policy is a true statement, as they typically meet this often to discuss and make monetary policy decisions. B) The FOMC issues directives to the trading desk at the New York Fed is true, as part of its function is to guide open market operations through directives.

However, statement C) Designers of the Federal Reserve Act did not envision the use of discount lending as a monetary policy tool is not clearly stated in the provided information and requires knowledge of the historical context of the Federal Reserve system, but discount lending has indeed been used as a tool historically, albeit not as the primary tool.

Therefore, the correct answer would be E) Only A and B of the above are true statements.