Topic 11

Question 1

Structure of Fed Board of Governors

Answer 1

• 7 appointed by president
• maximum 14 year terms
• chair serves 4-yr renewable terms (Current is Jerome Powell)

Question 2

Duties of Board of Governors

Answer 2

• vote on requests for discount rate changes
• change reserve requirements
• regulate member banks and all bank holding companies
• administer regulations on consumer finance
• oversee regional Federal Reserve Banks

Question 3

Structure of Regional Fed Banks

Answer 3

Total of 12 in the US
Class A directors - usually bankers
Class B directors - usually business leaders
Class C directors - public interest directors (appointed by Board of Governors)

Question 4

Duties of Regional Fed Banks

Answer 4

supply currency and clear checks

• serve as U.S. government’s bank
• regulate banks
• collect economic data
• conduct economic research
• request discount rate changes
• administer discount “window”
• administer required reserve regulations and hold deposits (reserves) for banks

Question 5

Structure of FOMC

Answer 5

Federal Open Market Committee

7 governors, NY Fed President, and 4 other regional bank presidents

Question 6

Role of FOMC

Answer 6

meet every 6 weeks to decide on interest rates (tighter, kept constant, or easier)

Question 7

Issues with independence of the Fed

Answer 7

a. consistent with democracy
- whose interests are represented by Fed
b. possible conflict with fiscal policy