
Why is it important for the members of the Board of Governors of the Federal Reserve to have longer terms in office than elected officials, like the President?

The reason behind longer appointment terms of the members of the Board of Governors of the Federal Reserve in comparison to the elected officials, like the Presidents.
Explanation of Solution
The Federal Reserve System (Central Bank of the USA) is actually a semi-decentralized organization managed by a mix of appointees, from private-sector banks as well as from the government. A Board of Governors comprising seven members appointed by the President of the USA and confirmed by the Senate runs “the Fed” on 14-year terms.
The reason behind such long and staggered appointment terms of the members of the Board of Governors is to isolate them from political pressure to the maximum extend possible. It helps the board in making unbiased policy decisions only based on their economic merits. Further, to insulate decision-making from politics during filling of an unfinished term, each member only serves one term. The Fed’s policy decisions do not require congressional approval, and unlike President, Federal Reserve Governor cannot resign with cabinet positions.
Organization of the U.S. Federal Reserve: The Federal Reserve System is basically the central bank of the USA engaged in making decisions regarding money supply. It not only decides whether to lower or raise interest rates and, influence macroeconomic policy but also regulates the nation’s banking system to insure the health of the bank’s balance sheet and protect bank depositors. In USA, we call the central bank the Federal Reserve System often abbreviated as “the Fed.”
Want to see more full solutions like this?
Chapter 15 Solutions
Principles of Macroeconomics 2e
Additional Business Textbook Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Managerial Accounting (5th Edition)
Financial Accounting, Student Value Edition (5th Edition)
Intermediate Accounting (2nd Edition)
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Operations Management
- Can you please help with this one. Some economists argue that taxing consumption is more efficient than taxing income. Following the same argument, the minister of finance of a country introduced a new tax for sugar based products “sugar tax” to promote healthy eating in the economy. Please use relevant diagrams to explain the impact of the tax on consumers, producers and the tax revenue when sugar is elastic and inelastic.arrow_forwardprofit maximizing and loss minamization fire dragon co mindtaparrow_forwardProblem 3 You are given the following demand for European luxury automobiles: Q=1,000 P-0.5.2/1.6 where P-Price of European luxury cars PA = Price of American luxury cars P, Price of Japanese luxury cars I= Annual income of car buyers Assume that each of the coefficients is statistically significant (i.e., that they passed the t-test). On the basis of the information given, answer the following questions 1. Comment on the degree of substitutability between European and American luxury cars and between European and Japanese luxury cars. Explain some possible reasons for the results in the equation. 2. Comment on the coefficient for the income variable. Is this result what you would expect? Explain. 3. Comment on the coefficient of the European car price variable. Is that what you would expect? Explain.arrow_forward
- Problem 2: A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q=+15,000-2.80P+150A+0.3P+0.35Pm+0.2Pc (5,234) (1.29) (175) (0.12) (0.17) (0.13) R²=0.68 SER 786 F=21.25 The variables and their assumed values are P = Price of basic model = 7,000 Q==Quantity A = Advertising expenditures (in thousands) = 52 P = Average price of a personal computer = 4,000 P. Average price of a minicomputer = 15,000 Pe Average price of a leading competitor's workstation = 8,000 1. Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies? 2. Conduct a t-test for the statistical significance of each variable. In each case, state whether a one-tail or two-tail test is required. What difference, if any, does it make to…arrow_forwardYou are the manager of a large automobile dealership who wants to learn more about the effective- ness of various discounts offered to customers over the past 14 months. Following are the average negotiated prices for each month and the quantities sold of a basic model (adjusted for various options) over this period of time. 1. Graph this information on a scatter plot. Estimate the demand equation. What do the regression results indicate about the desirability of discounting the price? Explain. Month Price Quantity Jan. 12,500 15 Feb. 12,200 17 Mar. 11,900 16 Apr. 12,000 18 May 11,800 20 June 12,500 18 July 11,700 22 Aug. 12,100 15 Sept. 11,400 22 Oct. 11,400 25 Nov. 11,200 24 Dec. 11,000 30 Jan. 10,800 25 Feb. 10,000 28 2. What other factors besides price might be included in this equation? Do you foresee any difficulty in obtaining these additional data or incorporating them in the regression analysis?arrow_forwardsimple steps on how it should look like on excelarrow_forward
- Consider options on a stock that does not pay dividends.The stock price is $100 per share, and the risk-free interest rate is 10%.Thestock moves randomly with u=1.25and d=1/u Use Excel to calculate the premium of a10-year call with a strike of $100.arrow_forwardCompute the Fourier sine and cosine transforms of f(x) = e.arrow_forwardDon't use ai to answer I will report you answerarrow_forward
- Economics Today and Tomorrow, Student EditionEconomicsISBN:9780078747663Author:McGraw-HillPublisher:Glencoe/McGraw-Hill School Pub CoExploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, IncEssentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
- Brief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage Learning





