Asked by Sulema Benavides on May 30, 2024
Verified
The primary purpose of the Federal Open Market Committee (FOMC) is to:
A) set reserve requirements.
B) extend loans to member banks of the Fed.
C) buy and sell government securities.
D) distribute Federal Reserve notes.
E) enforce bank regulations.
FOMC
The Federal Open Market Committee, which is the branch of the Federal Reserve responsible for overseeing the nation's open market operations and interest rates.
Government Securities
Financial instruments issued by the government to raise funds from the public, promising to pay back with interest.
- Explain how the Federal Reserve employs instruments such as open-market operations and the discount rate to impact monetary policy.
Verified Answer
ZK
Zybrea KnightJun 02, 2024
Final Answer :
C
Explanation :
The primary purpose of the FOMC is to conduct monetary policy by buying and selling government securities with the goal of achieving stable prices, maximum employment, and moderate long-term interest rates. This is done through open market operations, which involve the purchase and sale of securities in the open market. The FOMC does not set reserve requirements, extend loans to member banks, distribute Federal Reserve notes, or enforce bank regulations.
Learning Objectives
- Explain how the Federal Reserve employs instruments such as open-market operations and the discount rate to impact monetary policy.