The Explicit Functions Given to the Fed by the Congress

question 161

Multiple Choice

The explicit functions given to the Fed by the Congress include all of the following except:

• A)regulating financial institutions.
• B)serving as a lender of last resort to financial institutions.
• C)providing banking services to the U.S. government.
• D)holding the nominal interest rate no more than 2 percent above the real interest rate.

---

Definitions:

Cyclical Unemployment

Refers to the unemployment that occurs due to fluctuations in the economy or the business cycle, such as during a recession.

Budget Deficit

A budget deficit occurs when a government’s expenditures exceed its revenues within a given fiscal period, leading to the need for borrowing or using saved reserves.

Keynesian Model

An economic theory advocating for government intervention in the economy through fiscal policies to manage demand and address unemployment.

Creeping Inflation

A relatively low rate of inflation, such as the rate of less than 4 percent in the United States in recent years.