HW_3_Questions_Chapters_7_and_8[1]

HW_3_Questions_Chapters_7_and_8[1] - HW 3 Questions Chapter...

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HW 3 Questions Chapter 7 1. Why was the Federal Reserve System set up with twelve regional Federal Reserve banks rather than one central bank, as in other countries? 2. In what ways can the regional Federal Reserve banks influence the conduct of monetary policy. 3. Which entities in the Federal Reserve System control the discount rate? Reserve requirements? Open market operations? 4. Do you think that the 14-year nonrenewable terms for governors effectively insulate the Board of Governors from political pressure? 5. “The theory of bureaucratic behavior indicates that the Fed never operates in the public interest.” Is this statement, true, false, or uncertain? Explain your answer. 6. “The independence of the Fed has meant that it takes the long view and now the short view.” Is this statement true, false, or uncertain? Explain your answer. Chapter 8 1. Which goals of the Fed conflict? 2. If the Fed has an interest-rate target, meaning they want to control the interest rate at a specific rate such as 4%, why will an increase in the demand for reserves lead to a rise in the money supply? 3. The Federal Reserve wants to increase the supply of reserves, so it purchases $1 million dollars worth of bonds from the public. Show the effect of this open market operation using T-accounts. 4.
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HW_3_Questions_Chapters_7_and_8[1] - HW 3 Questions Chapter...

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