1. The organization of the Fec Complete the following statements to demonstrate
ID: 1227498 • Letter: 1
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1. The organization of the Fec Complete the following statements to demonstrate your understanding of the relationships among the different structures of the Federal Reserve. The Board of Governors of the Federal Reserve is in charge of setting and overseeing monetary policy and is headed by the president of the Bank of New York . Monetary policy is supposed to be independent of Congress and the president. This goal is aided by the fact that the governors' 14-year terms allow them to outlast the president who appointed them. Because Congress initially intended to create a decentralized banking system, there are also smaller branches of the Federal Reserve known as district banks. All presidents of the district banks take turns serving as members of the Federal Open Market Committee (FOMC) except for the president of the Federal Reserve Bank of New York , who is a permanent member.Explanation / Answer
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1.
The fed has a board of governers with headquarters in New York.This is headed by the President of teh Bank of New York.It is an independent policymaking body.The tenure for the governer is of 14 years.The smallers bank branches of the Fed are known as the district banks.Only the president of the New York Bank is a permanent member of the FOMC.
5
Risk premium is calculates as the difference between the return offered by a company and the treasury.
Thus risk premium is 7.3-2.9=4.4
If the rate of return is increased to 8.9 new risk premium would become 8.9-2.9=6
Thus, the spread would be increased
A higher return means the risk has increased
8
Open market operation only include the short term government securities whereas Quantitative easing focuses both on short term as well as the long term government securities.Hence, the statement is False
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