Week 4 - Answers - 1. Who is responsible for setting moneta...

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1. Who is responsible for setting monetary policy in the United States? Hint: Be more specific than “The Fed.” The Federal Open Market Committee (FOMC) is responsible for setting monetary policy in the United States. In detail, explain who is in this group and how this group is chosen. The FOMC consists of the 7 members of the Federal Reserve Board of Governors and 5 of the 12 presidents of Federal Reserve Banks. Members of the Board of Governors are appointed by the president of the United States and confirmed by the U.S. Senate. The presidents of the Federal Reserve Banks are chosen by each bank’s board of directors. 2. If the Fed wants to increase the money supply with open-market operations, what does it do? If the Fed wants to increase the supply of money with open-market operations, it purchases U.S. government bonds from the public on the open market. The purchase increases the number of dollars in the hands of the public, thus raising the money supply. 3.
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This note was uploaded on 06/20/2011 for the course ECON 211 taught by Professor Morrison during the Spring '10 term at Wayne State University.

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Week 4 - Answers - 1. Who is responsible for setting moneta...

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