Explain the structure of the Federal Reserve System
What will be an ideal response?
The Federal Reserve system consists of 12 Federal Reserve districts, each of which has a Federal Reserve Bank. These 12 Federal Reserve Banks are owned by commercial banks within their districts, and each selects its own president. In addition to the 12 regional banks, the Fed has the Board of Governors, headquartered in Washington, D.C., with 7 members appointed by the president of the United States and confirmed by the U.S. Senate. Each member is appointed to a non-renewable 14-year term, with one member appointed every other year. One of the 7 members of the Board of Governors is appointed by the president of the United States to serve as the chairman of the Fed, with a renewable 4-year term. The Board of Governors oversees the entire Federal Reserve System. The Federal Open Market Committee (FOMC) consists of 12 members which include all 7 members of the Board of Governors, the president of the Federal Reserve Bank of New York, and 4 of the other 11 Federal Reserve Bank presidents who serve on a rotating basis. The center of Fed policymaking, the FOMC conducts open market operations, which is the buying and selling of U.S. Treasury securities.
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The trade-offs facing workers include all of the following EXCEPT:
A) decision to work or remain outside the workforce. B) decision to work or seek additional education. C) decision to work for a large corporation or a small firm. D) decision to allocate their time between work and leisure. E) All of the above are trade-offs facing workers.
If the potential money multiplier is 4, a $1 increase in demand deposits can potentially support $4 of demand deposits
Indicate whether the statement is true or false
Suppose we observe the following 1-year interest rates:
Euro $ = 15% Euro SF = 12% The exchange rate is quoted as the dollar price of Swiss francs and is currently E = 0.40. (a) Given the information above, what is the 12-month forward rate? (b) Suppose the actual 12-month forward rate is not what you found from (a), but instead is $0.42. What would profit-seeking arbitrageurs do?
Which of the following often involves positive external benefits?
A) water pollution B) drunken driving C) inoculation programs D) tobacco smoking