Question 1

Given the democratic political structure of the United States, make an argument against the independence granted the Federal Reserve.

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Question 2

Considering the three branches that make up the Federal Reserve System, identify the corresponding branches that make up the Euro system. Be sure to state which part of the Euro system corresponds to which part of the Federal Reserve System.

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Question 3

How is accountability achieved for the Federal Reserve and is it clear?

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Question 4

What argument can you offer to justify the policy prohibiting formal voting during the Euro systems Governing Council meetings?

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Question 5

Why can it be argued that, while interest rate decisions are made by the FOMC, a committee, the real power of the committee lies with the Chairman of the Federal Reserve System?

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Question 6

What is the difference between the European System of Central Banks and the Euro system?

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Question 7

Explain why the decision to join the Euro system presents serious domestic monetary policy issues.

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Question 8

In the mid-1930s, the Federal Reserve became more independent from political pressure. What significant changes occurred then to increase the Fed's independence?

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Question 9

If the current number of participating countries in the Euro system is nineteen as of 2017 and the number of large countries is four (Germany, France, Italy, and Spain), are policies likely to favor small or large countries? Explain.

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Question 10

What are the three criteria that are used to judge a central bank's independence and how does the Fed stack up to each of these criteria?

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Question 11

In terms of the decisions coming from the Euro system's Governing Council, explain why, at times, relatively small countries may be at a distinct disadvantage in terms of monetary policy targets but perhaps have undue influence in terms of the actual policies.

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Question 12

Discuss whether a large private organization could function in the role of a lender of last resort, and if it could, what potential problem(s) might arise.

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Question 13

Respond to the following statement with a brief explanation: "The Federal Reserve can improve the performance of the stock market but it cannot prevent a stock market crash."

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Question 14

The system of government in the U.S. has historically been one of checks and balances. Provide examples of these checks and balances as they pertain to the Board of Governors of the Federal Reserve and their relationship to the executive and legislative branches of government.

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Question 15

There are several important differences between the Fed and the European Central Bank
(ECB). What are they?

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Question 16

Explain how a regulation requiring banks to keep a given percentage of deposits in an account paying below market interest rates at the Fed is really a tax on banks.

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Quiz 16: The Structure of Central Banks: The Federal Reserve and the European Central Bank