Asked by Aliyana Shivji on Apr 29, 2024
Verified
Statement I: The president appoints the Chairman of the Federal Reserve Board at the beginning of his administration.
Statement II: The deposit expansion multiplier is the reciprocal of the reserve ratio.
A) Statement I is true and statement II is false.
B) Statement II is true and statement I is false.
C) Both statements are true.
D) Both statements are false.
Federal Reserve Board
A central body of the Federal Reserve System, overseeing the nation's monetary policy and regulating banks.
Deposit Expansion Multiplier
The deposit expansion multiplier refers to the ratio of the amount of money banks can create in the form of checkable deposits to the amount of reserves they hold.
Reserve Ratio
The fraction of deposits that banks are required to hold in reserve and not lend out, set by central banks to control the money supply and banking stability.
- Discern the configuration and roles associated with the Federal Reserve System.
Verified Answer
ZK
Zybrea KnightMay 03, 2024
Final Answer :
B
Explanation :
Statement I is false because the President of the United States does not appoint the Chairman of the Federal Reserve Board specifically at the beginning of his administration; the appointment can occur at any time when the previous chairman's term expires or if there is a vacancy. Statement II is true as the deposit expansion multiplier is indeed the reciprocal of the reserve ratio, which is a fundamental concept in banking that describes how much the money supply can increase based on banks' ability to lend.
Learning Objectives
- Discern the configuration and roles associated with the Federal Reserve System.