Question

What is the Federal Reserve's primary source of income?

Select one:

A. Tax revenues

B. Fees for check processing

C. Treasury Department

D. Interest on government securities.

Which is NOT a desirable feature of a central bank according to chapter 16?

Select one:

A. transparency

B. independence from political influence

C. direct control by the federal government

D. decision-making by committee

Answer 1

Q-1 :: ANSWER :: (D) Interest On Government Securities

=> Explanation ::

The Federal Reserve's Primary Source Of Income Is US Government Securities Interest That They Purchased To Increase Money Supply in The Economy By Open Market Operations. So Fed Earn Income By The Interest On Government Securities.

Q-2 :: ANSWER :: (B) Independence from political influence

=> Explanation ::

Central Bank Have Its Desirable Features Like Transparency, Direct Control By Government By appointing Nominee and Decision Making By Committee Which Know As Federal Reserve Committee.But Independence From Political Influence Is Not A Feature Of Central Bank Some Time While Policy Making Policymaker Experience The Pressure Of Political Leaders So Central Bank Also Influence By Political Pressure.