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An important function of the Federal Reserve Banks is ... a. to set the required reserve...

An important function of the Federal Reserve Banks is ... a. to set the required reserve ratio. b. to conduct open market operations. c. to set the discount rates. d. to formulate the nation's fiscal policies.

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Answer #1

open market operations and reserve ratio are the function of Federal Reserve Bank but they are not considered as the most important function as they are supplementary functions on the hole and that is the reason why

(a,b) are wrong

Fiscal policy is determined by the government and not the central bank

Therefore (d) is wrong

The main and important function of the Federal Reserve Bank is to formulate the monetary policy where discount rate is the most important factor as a result of which it can keep the inflation in check and make the business moving in the country on the whole.

That's why (c) is the answer to this question

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