The Make-Up of the Governing Council of the European Central

question 10

Multiple Choice

The make-up of the Governing Council of the European Central Bank and the methods used to calculate price stability for the monetary system can potentially result in:

• A) small countries having undue influence on the decisions of the Council.
• B) monetary policy that is well suited for some countries but ill-suited for others.
• C) a policy for the median country rather than a policy well suited for any country.
• D) all of the results listed are possible.

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Definitions:

U.S. Treasury

The federal department responsible for managing government revenue, including producing currency, managing national accounts, and administering public finance.

Currency

A system of money in general use in a particular country for the exchange of goods and services.

Federal Reserve

The Federal Reserve, often referred to as "the Fed," is the central banking system of the United States, responsible for setting monetary policy, regulating banks, maintaining financial stability, and providing banking services to governmental agencies.

Reserve Ratio

The reserve ratio is the fraction of deposits that regulators require a bank to hold in reserve and not lend out. This is a tool used by central banks to control the money supply.