Question

Which of the following is the basic economic policy function of the Federal Reserve Banks? A. holding the deposits or reserves of commercial banks B. acting as fiscal agents for the Federal government C. controlling the supply of money D. the collection or clearing of checks among commercial banks

Answer 1

Answer:

C, Controlling the supply of money

Explanation:

Federal Reserve Banks are banks that work together with a board to supervise commercial banks and their activities as well as implement policies, regulations and also influence the supply of money and credit.

Among these responsibilities or functions, its most basic economic policy is controlling the supply of money to the economy. When deposits are made in commercial banks, a percentage of those deposits are used up by the bank to conduct their businesses and the other saved up with the federal reserve banks.. When the commercial banks are short on funds to conduct business, the federal reserve banks are called upon to supply funds to make up for the deficit.  

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