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Which statement accurately explains the functions of the Federal Reserve district banks and those for the Board of Governors.

A. The Federal Reserve district banks set the target federal funds rate and oversee open market operations while the Board of Governors direct monetary policy and set reserve requirements on banks.

B. The Federal Reserve district banks direct monetary policy and overlook the banking industry while the Board of Governors implement the policies from the district banks.

C. The Board of Governors set the target federal funds rate and overlook the banking industry while the Federal Reserve district banks implement the policies from the Board of Governors.

D. The Board of Governors set the discount rate and reserve requirements on banks while the Federal Reserve district banks overlook the banking industry and implement the policies from the Board of Governors.

1 answer

The correct statement is:

C. The Board of Governors set the target federal funds rate and overlook the banking industry while the Federal Reserve district banks implement the policies from the Board of Governors.

This accurately describes the relationship between the Board of Governors and the Federal Reserve district banks. The Board of Governors is responsible for directing monetary policy and overseeing the overall operation of the Federal Reserve System, which includes setting key interest rates. The district banks play a crucial role in implementing these policies and providing services to commercial banks and the federal government.