Critics of the current system of fed independence

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70) Critics of the current system of Fed independence contend that A) the current system is undemocratic. B) voters have too much say about monetary policy. C) the President has too much control over monetary policy on a day-to-day basis. D) all of the above are true. Answer: A 84
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71) Critics of Fed independence argue 72) Critics of Fed independence argue 6.2 True/False 1) The unusual structure of the Federal Reserve System is best explained by Americans’ fear of centralized power. Answer: TRUE 2) Rapid money supply growth and uncontrollable inflation were among the factors which motivated the creation of the Federal Reserve System. Answer: FALSE 3) The Washington, D.C. Fed bank, with over 30 percent of the system’s assets, is the most important Federal Reserve Bank. Answer: FALSE 4) The FOMC is an element of the Federal Reserve System. Answer: TRUE 85 5) All nationally chartered banks are required to be members of the Fed. Answer: TRUE 6) Designers of the Federal Reserve Act of 1913 intended the Fed to use open market operations as a policy tool. Answer: FALSE 7) Each member of the seven-member board is appointed by the President and confirmed by the Senate to serve 14-year terms. Answer: TRUE 8) The Board of Governors does not set reserve requirements. Answer: FALSE 9) Monetary policy is set by the Board of Governors. Answer: FALSE 10) Federal Reserve monetary policy decisions must be approved by the Secretary of the Treasury before they may be implemented. Answer: FALSE 11) The FOMC issues directives to the trading desk at the New York Fed. Answer: TRUE 12) Critics of the current system of Fed independence contend that the President has too much control over monetary policy on a day-to-day basis. Answer: FALSE 6.3 Essay 1) Congressman Jack Kemp is reported to have said that he wanted to become the most powerful man in Washington, D.C.—the chairman of the Board of Governors of the Federal Reserve System. What does Representative Kemp’s comment imply about the power of the chairman of the Federal Reserve? Do you think he may have been exaggerating? Explain. 2) Paul Volcker is reported to have said that the Federal Reserve is free to pursue any policy it desires, as long as it convinces Congress that such a policy is reasonable.
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