Predict how monetary policy making would change, if at all, if members of the Board of Governors of the Federal Reserve were popularly elected to two-year terms and could run for re-election.
What will be an ideal response?
There would likely be many changes and none of them necessarily favorable. The most basic change would be the time horizon of monetary policy. Currently monetary policymakers have a long time horizon. With a two-year term and re-election, this focus is likely to change to a very short time horizon. Another potentially harmful impact is that elected officials are subject to pressure from special interest groups. Currently, Fed Board members are somewhat immune from special interest groups because they do not need to worry about re-election, they do not need to build up campaign funds nor worry about campaign promises that were made. This would all change with the prospect of having to run for election and campaign. Many arguments have been made that in a democracy having something as important as monetary policy in the hands of non-elected officials presents problems, but those problems pale compared to the ones that might exist if monetary policymaking was in the hands of elected officials.
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If, in the short run, the level of output is zero, which of the following statement is TRUE?
A) Total variable cost is zero but total cost equals total fixed cost, and both of the latter exceed zero. B) Total cost and total fixed cost graphs will begin at the origin. C) Total fixed cost will also be zero at first but will rise once output rises. D) none of the above
For this question, ignore tax considerations of each of the following. Assume that consumption decisions are made according to the permanent income theory. Which of the following would lead to the smallest increase in current consumption?
A) winning $10,000 in the lottery B) inheriting $10,000 from a relative C) obtaining $10,000 by winning a lawsuit D) getting a one-time $10,000 bonus from your employer E) all of the above
Mismatch and turnover unemployment, while conceptually easy to distinguish, are often difficult to identify. Ceteris paribus, a person out of work for two months would be classified by Gordon as
A) experiencing turnover unemployment. B) experiencing mismatch unemployment. C) impossible to distinguish the type. D) first frictionally unemployed (the first month) and then structurally unemployed.
The following is cost information for the Creamy Crisp Donut Company: Entrepreneur's potential earnings as a salaried worker = $50,000 Annual lease on building = $22,000 Annual revenue from operations = $380,000 Payments to workers = $120,000
Utilities (electricity, water, disposal) costs = $8,000 Value of entrepreneur's talent in the next best entrepreneurial activity = $80,000 Entrepreneur's forgone interest on personal funds used to finance the business = $6,000 Refer to the data. Creamy Crisp's explicit costs are: A. $286,000. B. $150,000. C. $94,000. D. $156,000.