In the mid 1930s, the Federal Reserve became more independent from political pressure. What significant changes occurred then to increase the Fed's independence?
What will be an ideal response?
There were really two major changes. One was the removal of the Secretary of the Treasury and the Comptroller of the Currency from the Board of Governors. Both of these positions are politically appointed and could exert administration/political influence on the Board of the Fed. The other significant change was the creation of the FOMC, which really gave control of monetary policy to the Fed.
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Suppose the exchange rate between the U.S. and Argentina is initially set at 20 pesos per dollar and increases to 25 pesos per dollar. In the U.S. economy this would be expected to
A. increase exports and decrease imports. B. increase both exports imports. C. decrease both exports imports. D. increase imports and decrease exports.
If the market for tires is unregulated and is presently characterized by excess supply, you can accurately predict that price will
A. decrease, the quantity demanded will fall, and the quantity supplied will rise. B. increase, the quantity demanded will rise, and the quantity supplied will fall. C. increase, the quantity demanded will fall, and the quantity supplied will rise. D. decrease, the quantity demanded will rise, and the quantity supplied will fall.
All of the following are incomes earned in the factor market EXCEPT
A) wages. B) prices of goods and services. C) rents. D) profits.
Which of the following pairs of policies have inconsistent effects on aggregate demand? a. A tax increase and an increase in the money supply
b. A transfer payment increase and an increase in the money supply. c. A reduction in government purchases and a reduction of the money supply. d. none of the above