The entire structure of the Federal Reserve is set up to get the most support from across the nation and to keep elected officials at an arm’s length. Keeping politics as much as possible out of the money supply is the goal for most central banks. Did I Get This : 27. True or false. The United States is divided into 12 Federal Reserve districts, each with its own Reserve Bank. True Correct. The Federal Reserve System was designed to allay fears about concentrating financial power at the federal level. 28. Who does the Federal Reserve Board of Governors include? Seven members appointed by the U.S. president for 14-year staggered terms Correct. These governors do not always complete the entire 14-year term. Also, no more than one governor from any of the 12 districts can serve on the board. 29. The chair of the Federal Reserve Board of Governors is chosen by the president from among the sitting governors for a 4-year, renewable term. Correct. The current chair is Janet Yellen, formerly the vice-chair and the first woman to serve in this capacity. 30. True or false . The Federal Open Market Committee (FOMC) consists of the 12 Federal Reserve Bank presidents, one from each district.
False Correct. Membership of the FOMC reflects a compromise between centralized and decentralized power. 31. "Fill in the blank" question: The Federal Reserve Board of Governors includes seven members, each appointed by the president to serve 14 -year terms. The chair of the Board of Governors is appointed to serve 4 a -year term. Yellen was appointed in 2013 to replace Bernanake . Correct. Ben Bernanke was appointed to head the Fed when Greenspan completed his full term. Correct. Janet Yellen is the first woman appointed to head the Federal Reserve. Correct. The same person may be re-appointed to serve additional 4-year terms. Correct. Each of the seven members completes a 14-year term every 2 years, assuming everyone completes their full term. Correct. As long as each vacant position is filled, there are seven members. The Federal Reserve has three functions: 1. Sets monetary policy through decisions that affect the flow of money and credit 2. Contribute to the safety and soundness of the financial system by supervising and regulating banks 3. bank for depository institutions and the government and makes sure the payment system works efficiently While the first function, “sets monetary policy,” gets most of the attention, the other two functions are also important. Part of the failure of the early central banks in the U.S. was that they competed with private banks. The Federal Reserve does not do that. Banks keep their reserves with the Fed and the government keeps its funds there as well. This eliminates the possibility of cronyism where the government’s money goes to the bank whose president is friends with the current president and then when the president changes the money goes to a new bank. This third function also oversees the checking system making sure checks went to the correct bank. With the widespread acceptance of electronic banking this part of the Fed’s