The Case for Federal Reserve Independence Includes the Idea That

question 31

Multiple Choice

The case for Federal Reserve independence includes the idea that

• A) 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.
• B) a Federal Reserve under the control of Congress or the president might make the so-called political business cycle more pronounced.
• C) the principal-agent problem is perhaps worse for the Fed than for congressmen since the former does not answer to the voters on election day.
• D) only A and B of the above.

---

Definitions:

Stimulus Contrast

The change in response strength or rate to a stimulus when the background or context stimuli are altered.

Stimulus Generalization

The process in psychology where a response that has been conditioned to a specific stimulus is also elicited by similar stimuli.

Discriminative Operant

A type of operant conditioning in which behavior is controlled by stimuli that signal the reinforcement of a behavioral response.

Behavioral Contrast

A phenomenon where the rate of response to a stimulus changes significantly due to the introduction of a reinforcement or punishment to another stimulus.