Question

Which event involves a function of the Federal Reserve System?

Answer 1

A. To increase employment, the Fed channels currency into an ambitious space-exploration program.

B. To increase national security, the Fed extends loans to technology development companies.

C. To promote economic growth, the Fed lifts home-loan restrictions on people with student-loan debt.

D. To promote price stability, the Fed breaks up a monopolistic international corporation.

Answer 2

The short answer is that the Fed is like a bank for other banks. They help back up banks and other financial institutions in times of crisis providing liquidity of assets and other safeguards to keep the economy working. Liquidity is a fancy term estimating how easy it is to get access to cash -- the money in your pocket or change in a piggy bank are examples of your own financial liquidity. For example, in one of the links above, when people affected by Hurricane Katrina in Louisiana needed to draw money from banks in the emergency, the Fed made sure that the banks had enough cash to fulfill the requests. Banks don't keep a physical amount of everyone's money in a safe -- it's all numbers and records flowing through the system. Your money is still there, but banks and ATMs only have so much to give out at any one time. The Fed can also make key decisions involving banking policy across the nation and need to work with member banks to see them through. No one bank can do that.

Answer 3

Whats the answer ???