Do you think, in the interest of transparency, the Chair of the Federal Reserve Board should explain in detail the subtleties surrounding policy decisions? Why or why not?
Answer to relevant QuestionsIf you were asked to design a new central bank, what two institutional design features of (a) the Federal Reserve System and (b) the ECB would you adopt? Explain your choices. Do you think the current procedures for appointing members to the Board of Governors are consistent with the principles of good central bank design? Explain your answer. Follow the impact of a $100 cash withdrawal through the entire banking system, assuming that the reserve requirement is 10 percent and that banks have no desire to hold excess reserves. Explain how an incomplete understanding at the Federal Reserve of the relationship between the central bank’s balance sheet and the money supply contributed to the Great Depression. How did the Fed’s behavior during the ...Looking again at the situation described in Problem14, do you think the size of the banking system’s balance sheet would be affected immediately by these changes to the central bank’s balance sheet? Explain your answer.
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