Chapter 10: Problem 1

Define: a. Federal Open Market Committee (FOMC) b. Federal Reserve System (the Fed) c. Board of Governors of the Federal Reserve System d. reserve account

Short Answer

Expert verified

The FOMC oversees the nation's open market operations, making key decisions about interest rates and the growth of the United States money supply. The Federal Reserve System (the Fed) is the central bank of the U.S., conducting the nation's monetary policy. The Board of Governors of the Federal Reserve System is a seven-member board that directs the monetary policy of the U.S. A reserve account is an account kept by commercial banks to hold deposits made into it for clearing any balances owed or to hold a specified amount of funds as stipulated by the central bank in the fractional reserve banking system.

Step by step solution

Define Federal Open Market Committee (FOMC)

The Federal Open Market Committee (FOMC) is a branch of the Federal Reserve System that is charged with overseeing the nation’s open market operations. This means they are responsible for making key decisions about interest rates and the growth of the United States money supply.

Define Federal Reserve System (the Fed)

The Federal Reserve System (the Fed) is the central bank of United States. It conducts the nation's monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy. It's composed of a central governmental agency—the Board of Governors—in Washington, D.C., and twelve regional Federal Reserve Banks.

Define Board of Governors of the Federal Reserve System

The Board of Governors of the Federal Reserve System is a seven-member board that directs the monetary policy of the United States. Appointed by the President and confirmed by the Senate, they serve 14-year terms to provide a measure of stability and continuity to monetary policy.

Define reserve account

A reserve account is an account kept by commercial banks to hold deposits made into it for the purpose of clearing any balances owed to other banks at the end of the business day. A reserve account is also a mandatory part of the fractional reserve banking system, as it's used to hold a specified amount of funds as stipulated by the central bank.

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