Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 1: Q.13 (page 66)

Why do managers of financial institutions care so much about the activities of the Federal Reserve System?

Short Answer

Expert verified

As financial reserve system monitors the entire banking system of the nation

Step by step solution

01

Step 1. Introduction

The Federal Reserve System is the United States of America's central banking system. Central bank is the apex monetary authority in an economic system. It monitors money supply, foreign exchange rates, and serves several other purposes.

02

Step 2. Explanation

The management was quite concerned about the central bank's decision because the central bank has a lot of authority over the incentives given to enterprises, such as providing liquidity and issuing bonds. This causes the management to pay close attention to the central bank's decisions.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

What effect might a fall in stock prices have on business investment?

In Exercise 1, you collected data on and then graphed the Dow Jones Industrial Average (DJIA). This same site reports forecast values of the DJIA. Go to http://www forecasts.org/data/index.htm, and click on FFC Home at the top of the page. Click on the Dow Jones Industrial link under Forecasts in the far-left column.

a. What is the Dow forecast to be in six months?

b. What percentage increase is forecast for the next six months?

Can you think of a reason why people in general do not lend money to one another to buy a house or a car? How would your answer explain the existence of banks?

What is one of the reasons for inflation in your country? Provide empirical evidence to support your answer.

Name two institutions that are not important financial intermediaries in an economy
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free