The Main Reason for the Length of the Term of Office

question 65

Multiple Choice

The main reason for the length of the term of office on the Federal Reserve Board is that

• A) this time period corresponds closely to the lag time between actions by the Fed and their impact on the economy.
• B) this term gives the individual governors the same job security as their peers in private commercial banks.
• C) many years of in-service education are required before board members can make substantive contributions.
• D) given the stringent requirements for membership, it has proven difficult to fill positions any more frequently.
• E) long appointments limit opportunities for political influence over the board.

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Definitions:

Adam Smith

A Scottish economist and philosopher, often considered the father of modern economics, known for his works on the principles of free markets and the "invisible hand."

Quantity Theory

An economic theory that relates the quantity of money in an economy to the level of prices of goods and services.

Monetary Policy

The process by which a central bank controls the money supply, aiming at specific economic targets such as controlling inflation, stimulating economic growth, and reducing unemployment.

Classical Economics

A school of thought in economics that emphasizes the idea that free markets can regulate themselves through the laws of supply and demand.