The principal-agent view of Fed motivation predicts that the Fed acts
A) to promote the interests of the general public.
B) to promote the interests of the Fed's principal—the President of the United States.
C) in order to increase its power, influence, and prestige.
D) in order to make sure its agents—commercial banks—carry out its wishes.
C
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Which of the following helps to reduce risk?
A) Abstain from risk taking. B) Obtain more information. C) Diversify. D) All of the above.
If real GDP stays the same but the price level increases:
A. nominal money demand should increase. B. real money demand should decrease. C. nominal money demand should remain the same. D. nominal money demand should decrease.
The interest rate on primary credit extended by the Fed is:
A. equal to the IOER. B. the average of the prime interest rate charged by the ten largest banks in the nation. C. below the IOER. D. above the IOER.
Social Security is a pure transfer program because
A) it transfers funds from current workers to the poor. B) the government transfers funds from middle-income workers to welfare recipients. C) current payroll taxes are used to pay the eligible retirees. D) the government subsidizes the medical bill of the poor.