Chapter 15, Problem 17AA

To determine

To explain:The way Fed can operate if it is in control of the executive branch.

Explanation of Solution

The Federal Reserve System acts with its network of banks. Fed divides the country into12 districts of Federal Reserve, each district has a Fed district bank. These district banks are arranged as a corporation whose owner are the member banks. These district banks have further 25 branch banks.

If the Fed would have been under the control of the executive branch, it would have operated differently. The independence operation of Fed will be affected if it is in under control of the executive branch. There can be some political interference for the application of policies and achievement of economic objectives.

Economics Concept Introduction

Introduction:

Federal Reserve-The Federal Reserve was formed in the year 1913 by Congress to act as the central banking organization of nation. It is a system or network of banks. The Federal Reserve or Fed is the body responsible for forming the monetary policies in the United States.