The Reason for the Creation of 12 Reserve Banks and the Election

question 4

Multiple Choice

The reason for the creation of 12 Reserve banks and the election of directors to each was to

• A)centralize banking power authority.
• B)strengthen the power of the Fed.
• C)decentralize policy-making authority.
• D)None of the above

---

Definitions:

Specialization

The practice of focusing resources on the production of specific goods or services to increase efficiency and expertise.

Total Output

The total quantity of goods or services produced by a firm or economy over a specific period.

Invisible Hand

The concept that the self-regulating nature of the marketplace leads to the efficient allocation of resources through individuals pursuing their own self-interest, originally introduced by Adam Smith.

Federal Government

A system of government in which power is divided between a central authority and constituent political units, such as states or provinces.