QUESTION 18 The primary purpose of the Federal Open Market Committee (FOMC) is t

Question

QUESTION 18 The primary purpose of the Federal Open Market Committee (FOMC) is to: a. extend loans to member banks of the Fed. b, distribute Federal Reserve notes. enforce bank regulations. Od. buy and sell government securities. Oe. set reserve requirements. QUESTION 19 A bank can legally hold reserves as: Oa. gold and coins. Ob. gold and checks. Oc. cash in its vault and non-interest-bearing reserve deposits at the Fed. d. gold and non-interest-bearing reserve deposits at the Fed. e. U.S. government securities and coins. QUESTION 20 A major reason for the development of money market mutual funds in the 1970s was that: O a. open-market operations were suspended. Ob.money market funds offered more flexible checking privileges than banks. Oc. money markets did not exist until 1970. O d. they were considered to be safer than banks. Oe. bank deposit rates were capped at levels below market interest rates. Click Save and Submit to save and submit. Click Save All Answers to save all answers.

Explanation / Answer

1> d> buy and sell government securities

Reason

The Federal Open Market Committee, a committee within the Federal Reserve System, is charged under the United States law with overseeing the nation's open market operations.

2> c>

Reason

Bank reserves are the currency deposits that are not lent out to a bank's clients. A small fraction of the total deposits is held internally by the bank in cash vaults or deposited with the central bank.

3> b>

It is made to preserve the cash and earning a small rate of return

4> borrowing by the government

This comes under the government spending.

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