The Case for Federal Reserve Independence Does Not Include the Idea

question 30

Multiple Choice

The case for Federal Reserve independence does not include the idea that

• A) political pressure would impart an inflationary bias to monetary policy.
• B) a politically insulated Fed would be more concerned with long-run objectives and thus be a defender of a sound dollar and a stable price level.
• C) policy is always performed better by an elite group such as the Fed.
• D) a Federal Reserve under the control of Congress or the president might make the so-called political business cycle more pronounced.

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Definitions:

Subducted Plate

A tectonic plate that is being forced underneath another plate into the Earth's mantle at a convergent boundary.

Ophiolite

A portion of the Earth's oceanic crust along with the upper mantle beneath it that has been elevated and is now visible above the surface of the sea.

Oceanic Crust

The part of the Earth's crust that underlies the ocean basins, generally thinner and more dense than continental crust, formed at mid-ocean ridges and recycled into the mantle at subduction zones.

Sheeted Dikes

A geological formation consisting of numerous parallel dikes formed when magma intrudes into a crack then solidifies.