The Economic Way of Thinking 13th Edition by David Prychitko, Peter Boettke, Paul Heyne

Exercise 16

The Federal Reserve was created to be an independent agency of the federal government-independent, that is, of the immediate political pressures that are felt by elected officials and appointed officials whom the elected officials can demote or discharge.
(a) Is it "undemocratic" to have an organization as powerful as the Fed that isn't answerable to the voters?
(b) If Fed officials had to answer to elected officials, would that make them answerable to the voters?
(c) Under which of these three circumstances do you think it is most likely, and under which do you think it is least likely that monetary policy would promote the public interest: the present system, a system under which presidents could dismiss Fed officials the way they can now dismiss cabinet members, or a referendum system under which the Fed's policies would have to be periodically approved by a majority vote of the electorate?