Explain the structure of the Federal Reserve System. What will ...

[Jipu 123]

Explain the structure of the Federal Reserve System.
 
  What will be an ideal response?

Question 2

For the majority of the U.S. population ________.
 
  A) consumption is driven solely by current income
  B) consumption smoothing is possible
  C) a change in lifetime resources will not change current consumption
  D) a change in lifetime resources will not change future consumption

[popopong]

Answer to Question 1

The Federal Reserve system consists of 12 Federal Reserve districts, each of which has a Federal Reserve Bank. These 12 Federal Reserve Banks are owned by commercial banks within their districts, and each selects its own president. In addition to the 12 regional banks, the Fed has the Board of Governors, headquartered in Washington, D.C., with 7 members appointed by the president of the United States and confirmed by the U.S. Senate. Each member is appointed to a non-renewable 14-year term, with one member appointed every other year. One of the 7 members of the Board of Governors is appointed by the president of the United States to serve as the chairman of the Fed, with a renewable 4-year term. The Board of Governors oversees the entire Federal Reserve System. The Federal Open Market Committee (FOMC) consists of 12 members which include all 7 members of the Board of Governors, the president of the Federal Reserve Bank of New York, and 4 of the other 11 Federal Reserve Bank presidents who serve on a rotating basis. The center of Fed policymaking, the FOMC conducts open market operations, which is the buying and selling of U.S. Treasury securities.

Answer to Question 2

B