Visit the Board of Governors of the Federal Reserve System web page.

1. Click on Federal Open Market Committee
Read through the page.

a. Note the rotation: who is a permanent member, which two alternate every other year, and who are the three-president rotations. Note the current voting members of the FOMC. Discuss any major issue you observe with the operation/functioning of the FOMC.
b. Read the most recent FOMC STATEMENT; summarize it in your own words highlighting the wording which indicates to you how the FED is indicating the most important policy issue for this time period. Include a copy of the link and the date.
c. Read the MINUTES of the most recent FOMC meeting; summarize the minutes highlighting the wording which indicates to you how the FED is indicating the most important policy issue for this time period. Include a copy of the link and the date.

2. Click on Policy Tools: Credit and Liquidity Programs and the Balance Sheet
Read through each of these in turn.
a. Explain the factors that affect the FED’s balance sheet
b. Explain what are the FED’s Liabilities
c. Explain the trend in the FED’s balance sheet (click on the “all” tab)
d. Explain the purpose and need for Central Bank Liquidity Swaps

3. Using the search function, find the following on the web:
a. Note the intended Federal Funds Rate to the Actual Federal Funds Rate recently. (Actual Federal Funds Rates are available on the web, target on the FED site.)
b. Note the recent discount rate levels throughout the year; provide a graph comparing the discount rate with the fed funds rate.
c. Note the current reserve requirements for commercial banks; comment on the differences you see for the various types of institutions.

3. Click on “Goals and Strategy” and “Normalization
Summarize in your own words the goals and strategy expressed within the link and then relate these to real world events.
FOMC Longer-Run Goals and Monetary Policy Strategy (PDF)
Summarize in your own words what is meant by normalization; then, relate the concepts to current events.
FOMC Policy Normalization Principles and Plans
Click on Reports
Visit Monetary Policy Reports to Congress

a. Read the most recent Testimony of Chairperson (or watch video).
Write a brief comparison of how the Chairperson’s statements coincide with both the minutes and the statement read previously.
b. Visit the Beige Book
Write a brief overview of the content: note what “most districts” reported most recently; note which one’s differ and why/how.

4. Using the FED’s Balance Sheet
On a recent Fed Balance Sheet, note which accounts are associated with OMO, which accounts are associated with Discount Window Lending, and which are associated with the Reserve Requirements. Using the change in amount in the key entries from the previous year, explain what you believe the FED has been doing throughout the year with each tool at its disposal.

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Answer 1:
a. The FOMC comprises of 12 members, 7 of whom are members of the Board of Governors and 5 are Presidents of Reserve Banks. The permanent member is the President of the Federal Reserve Bank of New York. The rotating seats are filled by four Presidents of bank, one from each of these groups:
• Boston, Philadelphia and Richmond.
• Atlanta, St. Louis and Dallas
• Minneapolis, Kansas City and San Francisco.
• Cleveland and Chicago.
While Cleveland and Chicago alternate every other year, the remaining three groups also alternate every year. Currently, the rotating members are Presidents from Atlanta, Richmond, Chicago and San Francisco and the same group would be voting members again in 2018. In 2016, they would not be either voting or alternate members and in 2017, they would be alternate members that do not possess voting rights. In my opinion, this functioning is efficient since all the representatives from different regions can express their views. The FOMC meets almost once in every 6 weeks and this also ensures that policy decision-making can be done properly....
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