The Monetary Control Act of 1980 (www.federalreserve .gov/paymentsystems/pricing/pricingpol.htm) requires the Federal Reserve (FED) to charge explicitly for certain services, in effect placing Federal Reserve banks in direct competition with large commercial banks for these services. The act also requires the FED to price these services based on full cost, including allocated indirect costs. Recent research indicates that the FED responded to the act by both improving the efficiency with which it provides these services and reallocating indirect costs to the less price-competitive services.

Required
Describe briefly how the allocation of indirect costs could have made the FED's most price sensitive services more competitive. Are there ethical or professional issues involved in this case?