What is the structure of the Federal Reserve Bank System?
What will be an ideal response?
The key elements in the structure of the Fed are:
a. The Board of Governors. The Board of Governors has seven members who are appointed by the President of the United States and confirmed by the Senate, each for a 14-year term.
b. The Regional Federal Reserve Banks. There are 12 regional banks, one for each of the 12 Federal Reserve districts. Each of these 12 banks has nine directors who appoint the bank's president, which is subject to approval by the Board of Governors.
c. The Federal Open Market committee or FOMC. The FOMC is the Fed's main policy-making committee. It has 12 voting members. Seven of the members are on the Board of Governors. One of the members is the president of the Federal Reserve Bank in New York. The other four members are presidents of other Federal Reserve Banks. Which four presidents are members changes on an annual rotating basis.
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The lack of a long-run tradeoff between the unemployment rate and the inflation rate means that
A) the natural unemployment rate cannot change. B) only a decrease in the inflation rate would bring a reduction in the natural unemployment rate. C) only fiscal policy is effective to lower the natural unemployment rate. D) only monetary policy is effective to lower the natural unemployment rate. E) an increase in the inflation rate would not bring a reduction in the natural unemployment rate.
Assume that the M1 multiplier is 3.0 and the monetary base is $200 billion. If M1 is currently equal to $600 billion and the Federal Reserve wishes to raise the level to $690 billion, the monetary base should be expanded by
A) $60 billion. B) $30 billion. C) $20 billion. D) $10 billion.
Total profit is maximized when marginal profit maximized.
Answer the following statement true (T) or false (F)
The difference between the minimum price the producer is willing to accept and the price the producer actually receives for a product is referred to as:
a. market surplus b. market shortage c. buyer surplus d. seller surplus.