1. which of the following institutions makes up the largest part of the federal reserve system organization? a. board of governors b. federal free market committee c. federal reserve banks d. member banks and other depository institutions 2. if the united states falls into a recession, which action would the federal reserve take to encourage employment? a. buy government securities b. increase reserve requirements c. raise federal funds and prime rates d. sell government securities

Correct answer choice for question 1 is :

While the Board of Governors is a sovereign government agency, the Federal Reserve Banks are set up like private companies. Member banks hold stock in the Federal Reserve Banks and earn profits. The Federal Reserve's interest is determined principally from the interest on U.S. government securities that it has received through open market operations.

Correct answer choice for question 2 is :

A recession is a business cycle recession which occurs in a general slowdown in financial activity. Macroeconomic indicators such as GDP, finance spending, capacity utilization, household income, business profits, and inflation fall, while failures and the unemployment rate rise.

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