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Chapter 14: Problem 5

Monetary policy is conducted by (LO1) a) the president only b) Congress only c) the president and Congress d) the Federal Reserve

Short Answer

Expert verified
The short answer is d) the Federal Reserve, which is responsible for conducting monetary policy in the United States.

Step by step solution

01

Monetary policy refers to the actions taken by a country's central bank to control and regulate the money supply, interest rates, and economic growth. It involves the management of money, both the supply and cost, to achieve desired economic outcomes, such as stable prices, strong economic growth, and low unemployment rates. #Step 2: Review the Functions of the President#

The president is the chief executive of the United States and is responsible for overseeing the executive branch of the government. While the president is involved in the creation and implementation of economic policies, such as fiscal policy, they do not carry out monetary policy. #Step 3: Review the Functions of Congress#
02

Congress is the legislative body of the United States and is responsible for making laws, including laws that regulate the country's financial systems. Congress, through its fiscal policy actions, can influence the economy. However, Congress does not implement monetary policy. #Step 4: Review the Functions of the President and Congress Together#

The president and Congress work together in various ways to address economic issues. They can initiate and enact laws, create and execute fiscal policies, and provide oversight of federal agencies. While these actions can influence the direction of monetary policy, they do not directly conduct monetary policy. #Step 5: Review the Functions of the Federal Reserve#
03

The Federal Reserve, also known as the Fed, is the central bank of the United States. Its primary responsibility is to implement monetary policy. The Federal Reserve controls the money supply and interest rates to maintain price stability, promote economic growth, and minimize unemployment. The Fed is an independent agency that operates separately from the president and Congress to ensure that monetary policy decisions are based solely on economic data and expert analysis. #Step 6: Determine the Correct Option#

Based on our understanding of the functions and responsibilities of each option, it is clear that the correct answer is: d) the Federal Reserve The Federal Reserve is solely responsible for conducting monetary policy in the United States.

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Most popular questions from this chapter

Money is created when someone \((\mathrm{LO4})\) a) takes out a bank loan b) pays back a bank loan c) spends money d) saves moncy

To restrict monetary growth, the Federal Reserve will (LO5) a) raise the Federal funds rate and sell securities b) raise the Federal funds rate and buy securities c) lower the Federal funds rate and sell securities d) lower the Federal funds rate and buy securities

A decrease in the rate of growth in the moncy supply will tend to interest rates and the level of investment. ( \(\mathrm{LO} 4)\) a) raise, raise b) lower, lower c) lower, raise d) raise, lower

Which of these is a secondary reserve? (LO2) a) Treasury bills b) gold c) vault cash d) deposits at the Federal Reserve District Bank

One of the main results of the Depository Institutions Deregulation and Monetary Control Act of 1980 may be to (LO7) a) lessen the number of financial institutions in the United States b) increase the number of financial institutions in the United States c) discourage the formation of big, nationwide, allpurpose financial institutions d) make it easier for the member banks to borrow money from the Federal Reserve District Banks
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