Chapter 5R, Problem 18MCQ

To determine

The correct option that defines the Federal Reserve.

Answer to Problem 18MCQ

Option d is correct.

Explanation of Solution

Explanation for the correct option:

d.

Federal reserve system is the central bank that is responsible for looking into matters related to the country’s banking system along with controlling its monetary base. Therefore, option d is correct.

Explanation for incorrect options:

a.

It is not the single central bank instead it is the central bank of a particular country. It means every country has its own central bank. Therefore, option a is incorrect.

b.

Secretary of the Treasury does not look into the matter of the banking system of the country and controlling its monetary base. Therefore, option b is incorrect.

c.

It is an institution that is referred to as the central bank of Country U that oversees the banking system of the country. It also controls the monetary base of the country. Therefore, option c is incorrect.

e.

Federal Reserve refers to the system that is responsible for banking regulations rather than lending to large corporations. Therefore, option e is incorrect.

Economics Concept Introduction

Monetary base: It is the sum of circulating currency and the reserves in the bank.

Federal Reserve System: It is a central bank that looks after the banking system of the country along with the control of its monetary base.