Questions from Financial Markets


Q: “The Federal Reserve System resembles the U.S. Constitution

“The Federal Reserve System resembles the U.S. Constitution in that it was designed with many checks and balances.” Discuss.

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Q: Do you think that the 14-year nonrenewable terms for governors

Do you think that the 14-year nonrenewable terms for governors effectively insulate the Board of Governors from political pressure?

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Q: The Fed is the most independent of all U.S.

The Fed is the most independent of all U.S. government agencies. What is the main difference between it and other government agencies that explains the Fed’s greater independence?

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Q: What is the primary tool that Congress uses to exercise some control

What is the primary tool that Congress uses to exercise some control over the Fed?

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Q: “The theory of bureaucratic behavior indicates that the Fed never operates

“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.

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Q: Why might eliminating the Fed’s independence lead to a more pronounced political

Why might eliminating the Fed’s independence lead to a more pronounced political business cycle?

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Q: “The independence of the Fed leaves it completely unaccountable for its

“The independence of the Fed leaves it completely unaccountable for its actions.” Is this statement true, false, or uncertain? Explain your answer.

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Q: Why was the Federal Reserve System set up with 12 regional Federal

Why was the Federal Reserve System set up with 12 regional Federal Reserve banks rather than one central bank, as in other countries?

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Q: If there were no asymmetry in the information that a borrower and

If there were no asymmetry in the information that a borrower and a lender had, could there still be a moral hazard problem?

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Q: What political realities might explain why the Federal Reserve Act of 1913

What political realities might explain why the Federal Reserve Act of 1913 placed two Federal Reserve banks in Missouri?

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