The Federal Open Market Committee
A) typically buys and sells long-term corporate bonds
B) implements the most powerful and flexible monetary policy tool of the Fed
C) works out of Washington D.C.
D) deals with most of the commercial banks of the nation

Question

Quizplus · Accepted Answer

The Federal Open Market Committee (FOMC) is responsible for implementing monetary policy in the United States. It sets the target range for the federal funds rate, which is the interest rate at which banks lend to each other overnight. By adjusting the federal funds rate, the FOMC can influence borrowing and spending in the economy, making it the most powerful and flexible monetary policy tool of the Fed. The FOMC meets eight times a year in Washington, D.C. and deals with the nation's largest banks. It does not typically buy or sell long-term corporate bonds.