Which of the following observations is true?
A)State governments are the shareholders of the Fed.
B)The Fed chairman is appointed for a ten-year term.
C)FOMC decisions largely determine short-term interest rates.
D)Member banks proportionately share all of Federal Reserve's profits.

Question

Quizplus · Accepted Answer

The FOMC (Federal Open Market Committee) is responsible for setting monetary policy, which includes determining short-term interest rates. Other decisions made by the Fed, such as setting reserve requirements and conducting open market operations, also affect interest rates. A) is incorrect because the Fed is owned by member banks, not state governments. B) is incorrect because the Fed chairman's term is four years, renewable as the President sees fit. D) is incorrect because member banks only receive a fixed dividend on their shares and do not proportionately share profits.

Which of the Following Observations Is True