The Federal Reserve
- 12 banks + 25 branches, and the Board of Governors in DC
- The Fed is independent, does not get funding or permission from Congress
- 7 members of the Board of Governors including 1 Chair (Currently Janet Yellen)
- Appointed for 14 year, nonrenewable terms
- Each branch has a president
- The FOMC (Federal Open Market Committee) is made up of the 7 members of the Board of Governors, the President of the New York Fed, and 4 rotating district presidents
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Suppose a monopsonist wants to hire more workers. If it has to pay the same wage to all of its workers, the:
a. marginal factor cost will fall while the wage will rise. b. wage will fall while the marginal factor cost will rise. c. difference between the wage and marginal factor cost will become smaller. d. difference between the wage and the labor supply curve will increase. e. wage and the marginal factor cost will increase.
If policy makers do nothing in a recessionary gap, the most likely outcome is a
a. drop in the inflation rate and a rise in the unemployment rate. b. drop in the inflation rate and a drop in the unemployment rate. c. rise in the inflation rate and a drop in the unemployment rate. d. rise in the inflation rate and a rise in the unemployment rate.
If the federal government placed a 50 cent per pack excise tax on cigarette manufacturers, and if as a result, the price to consumers of a pack of cigarettes went up by 40 cents, the
a. actual burden of this tax falls mostly on consumers. b. actual burden of this tax falls mostly on manufacturers. c. actual burden of the tax would be shared equally by producers and consumers. d. tax would clearly be a progressive tax.
Derek decides to forego a major appliance purchase and save the money. He transfers $2,100 from his checking account to his money market mutual fund. As a result of this transfer,
a. both M1 and M2 decrease by $2,100. b. M1 increases by $2,100 and M2 increases by $2,100. c. M1 decreases by $2,100 and M2 increases by $2,100. d. M1 decreases by $2,100 and M2 stays the same.