Question

2.         The Federal Reserve Banks do all but which one of the following?

A. Conduct monetary policy
B. Supervise and regulate bank activities
C. Serve as the commercial bank for the U.S. Treasury
D. Operate check clearing and wire transfer facilities
E. Conduct fiscal policy

3.         Currently the Fed primarily sets monetary policy by targeting

A. the fed funds rate.
B. the prime rate.
C. the level of non-borrowed reserves.
D. the level of borrowed reserves.
E. the discount window rate.

4.         The discount window rate is the rate that

A. banks charge for loans to corporate customers.
B. banks charge to lend foreign exchange to customers.
C. banks charge each other on loans of excess reserves.
D. banks charge securities dealers to finance their inventory.
E. the Federal Reserve charges on loans to commercial banks.

5.       If the Fed wishes to stimulate the economy it could

I. buy U.S. government securities.
II. raise the discount rate.
III. lower reserve requirements.

A. I and III only
B. II and III only
C. I and II only
D. II only
E. I, II, and II

Answer 1

2. The Federal Reserve Banks do not conduct fiscal policy. (Option E)

The fiscal policy is conducted by the government, not reserve banks.

The Federal Reserve Banks

• Conduct monetary policy
• Supervise and regulate bank activities
• Serve as the commercial bank for the U.S. Treasury
• Operate check clearing and wire transfer facilities

3. Currently, the Fed primarily sets monetary policy by targeting

A. the fed funds rate.

All other answer options are incorrect.

4. The discount window rate is the rate that

E. the Federal Reserve charges on loans to commercial banks.

All other answer options are incorrect.

5. If the Fed wishes to stimulate the economy it could

I. buy U.S. government securities.

III. lower reserve requirements.

Option A I and III only

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