Question

Which of the following is NOT a true statement concerning the operation of the FOMC of the FED:

1. Since the BOG and the FRDB Presidents are present and/or voting at the FOMC meetings, all Monetary Policy tools are generally discussed and determined at these meetings.
2. The Reserve Requirement is seldom an “active” monetary policy tool – it has only been changed about eleven times in the 100 year history of the FED.
3. The Federal Reserve FOMC Policy decisions often consider, or even target, the Federal Funds Rate to achieve Monetary Policy goals.
4. The Federal Reserve must receive permission from the US Treasury for all changes to Monetary Policy before implementation (taking action).

Answer 1

A. It is a true statement. It is right that all monetary police tools are discussed in the meetings with the given BOG and FRDB presidents presence.

B. It is true statement.

C. It is also true, FOMC Policy do consider.

D. It is not true. The FD do no need permission from US Treasury for all changes to monetary police before implementation. In general, they discuss about monetary police and come up with the final proposition. However, FD do not need any permission.

Hence, the correct answer is D.