The Fed is institutionally independent.A major disadvantage of this is that monetary policy
A)will always be coordinated with fiscal policy.
B)is not subject to democratic control as other policies are.
C)will never offset fiscal policy.
D)cannot be changed once it has been instituted.

Question

Quizplus · Accepted Answer

Institutional independence means that the Fed is not subject to political pressure or control, which has the advantage of enabling monetary policy to be implemented based on economic considerations rather than political considerations. However, the disadvantage is that democratic control over monetary policy is limited, since control over the institution itself is limited.

The Fed Is Institutionally Independent