Question

4. The structure of the Federal Reserve How does the Federal Reserve regulate the money supply? Check all that apply. By buying and selling bonds through open-market operations By buying and selling stocks By setting the interest rates on home mortgages and auto loans By setting reserve requirements By setting the interest rate charged by reserve banks for loans to member banks (the discount rate) The Federal Open Market Committee (FOMC): Controls the buying and selling of U.S. government bonds Issues mortgages to homeowners Buys and sells stocks

Answer 1

Central bank guideline the cash supply are as per the following:

Central bank can adjust the cash supply by purchasing and selling of securities in open market activity. Consequently, purchasing of securities builds cash supply and selling of securities diminishes cash supply.

In this way, by purchasing and selling securities through open market activities.

It can change cash supply by setting save prerequisite. Hence, ascend for possible later use prerequisite lessens cash supply and the other way around.

In this way, by setting hold prerequisites.

By changing discount rate, it can adjust the credit add up to bank and thus cash supply.

In this way, by setting the financing cost charged by save banks for credits to part banks (the discount rate)

In this way, the right answers are 2, 3 and 5

Answer 2

answered this

a, d, e. fed controls money supply through reserve requirements, open market operations and discount rate. It follows expansionary monetary policy during recession and contractionary monetary policy during inflation.

b and c applies. Federal reserve system is the central bank of US and consists of 12 federal reserve districts .There are seven members who are appointed by president for 14 year term.

Step-by-step explanation: