Jagannath University C Unit 2014-15 MCQ Question Bank, Solution & PDF

The Federal Reserve System is an independent agency of the :United States Government that helps oversee the national bank system. Since 1013 the Federal Reserve System, commonly called the Fed, has served as the central bank for the United States. It consists of twelve District Reserve Banks and their branch offices,along with several committees and councils. All national commercial banks are required by law to be members of Fed, and & , all deposit taking institutions are subject to regulations by the Fed regarding the amount of deposits that must be held in reserve an therefore, are not available for loans. The most powerful body is the seven-membe: Board of Governors in Washington, appointed by the President and confirmed by the Senate.The system's primary function is to control monetary policy by  influencing the cost and availability of money and credit through the purchase and sale of government securities. If the Federal ;Reserve provides too little money, interest rates tend to be high,borrowing is expensive, business activities ‘slows down, unemployment goes up and there is danger of recession. If there is too much money, interest rates decline and borrowing can lead to excess demand, pushing up prices and fueling inflation. The Fed had several responsibilities in addition to controlling the money :supply. In collaboration with US Department of the Treasury, the Fed puts new coins and paper currency into circulation by issuing them to banks. It also supervises the activities of member banks board and regulates certain aspects of international finance.