Foreign Service Officer Test (FSOT) Practice Exam

Which of the following is not a responsibility of the Federal Reserve Board?

1. A. Supervise federal deposit insurance programs

2. B. Regulate banks and financial institutions

3. C. Ensure checking account procedures of NAFTA countries comply

4. D. Control the supply of money

The correct answer is: C. Ensure checking account procedures of NAFTA countries comply

The Federal Reserve Board, which serves as the central bank of the United States, has specific responsibilities that primarily revolve around the regulation of banks, financial institutions, and the overall economy. One key function is to control the supply of money in circulation, which directly influences inflation, employment, and economic growth. Regulating banks and financial institutions is also a fundamental duty of the Federal Reserve, ensuring stability and compliance within the banking system. Furthermore, the Federal Reserve is responsible for supervising and regulating federal deposit insurance programs through its oversight of the Federal Deposit Insurance Corporation (FDIC) among other agencies. On the other hand, ensuring that checking account procedures of NAFTA countries comply falls outside the purview of the Federal Reserve. This task would typically involve the respective financial regulatory bodies of those individual countries rather than a responsibility of the U.S. Federal Reserve, highlighting that its duties are more focused on domestic economic and regulatory matters rather than international financial compliance related to trading agreements.