The Drafters of the Federal Reserve Act and Subsequent Legislation

question 33

Essay

The drafters of the Federal Reserve Act and subsequent legislation dealing with the nation's central bank intended that the Fed be able to take the long view and do what is best for the country without being influenced by short-term political considerations. For example, the Fed is not dependent on Congress for its budget. Instead of going through the congressional appropriation process, the Fed's budget comes from its earnings on its open market operations. Congress cannot threaten the Fed with the loss of funds if the Fed does not take the action Congress deems appropriate. The chapter lists several other components of the act that were intended to preserve the Fed's independence. Look through the chapter for three factors regarding the organization of the Federal Reserve and explain how these provisions contribute to the Fed's independence.

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Definitions:

Prokaryotes

Single-celled organisms without a nucleus or other membrane-bound organelles, including bacteria and archaea.

Gene Expression

The process by which information from a gene is used in the synthesis of a functional gene product, often a protein, which can affect the cell function and structure.

Transcriptional

Relating to transcription, the process by which the information in a strand of DNA is copied into a new molecule of messenger RNA (mRNA).

Y Chromosome

A sex chromosome found in mammals, including humans, typically associated with male characteristics and inherited from father to son.