11) The FOMC issues directives to the trading desk at the New York Fed.
12) Critics of the current system of Fed independence contend that the President has toomuch control over monetary policy on a day-to-day basis.
1) Congressman Jack Kemp is reported to have said that he wanted to become the mostpowerful man in Washington, D.C.—the chairman of the Board of Governors of theFederal Reserve System. What does Representative Kemp’s comment imply aboutthe power of the chairman of the Federal Reserve? Do you think he may have beenexaggerating? Explain.2) Paul Volcker is reported to have said that the Federal Reserve is free to pursue anypolicy it desires, as long as it convinces Congress that such a policy is reasonable.What does Volcker’s comment suggest about the independence of the Fed? Explain.3) What are the factors that promote the independence of the Federal Reserve?874) What factors limit the independence of the Federal Reserve?5) What are the arguments for and against an independent Fed?6) What is the theory of bureaucratic behavior? What types of behavior does it predictthe Fed might undertake?88