Question

Which of these is not something the fed is able to do?

Answer 1

Options:

a. being a lender of last resort

b. being concerned with the stability of the banking system

c. serving as a major bank for the central government

d. setting currency exchange rates

Answer:

D) setting currency exchange rates

Explanation:

The US currently uses a floating exchange rate, which means that the value of the US dollar depends on the supply and demand of the US dollar and not any decision taken by some government entity (including the Fed).

The Fed's four main responsibilities are:

1. control of the money supply and credit supply
2. regulation and supervision of financial institutions
3. serve as a banking and fiscal agent for the US government
4. supply payment services through depository institutions

Answer 2

The correct answer is "Prevent a budget deficit".

The FED or also known as The Federal Reserve System cannot prevent a budget deficit or the excessive use of money of the country, and increasing of expenses instead of an increase in the country's revenue.