23.sincee 2009, Congress has given the Fed new policy tools, most notably the au

Question

23.sincee 2009, Congress has given the Fed new policy tools, most notably the authority to (a) pay interest on bank reserves (b) close the stock market if trading becomes "disruptive" (c) require banks to give first priority in lending to consumers in their bank (d) all of the above

20 The main purpose of reserve requirements is to a) enable the Fed to control the amount of demand deposits b) ensure that banks a safe margin of cash assets available for daily use c)prevent banks "runs' by building public confidence in US banking d) enable the Fed to buy government securities with the reserves that banks have to keep at the Fed

Explanation / Answer

23 the answer is (a). The fed doesn't control capital market I. E stock exchange. The new tool was to pay interest on bank reserves. Other tool was overnight reverse repurchased agreement facility

20 The answer is b. It also prevents bank runs but the main purpose is to ensure banks remain liquid I. E ensure banks a safe margin of cash assets available for daily use.

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