What does the theory of bureaucratic behavior suggest is the objective of a bureaucracy?
48) According to the theory of bureaucratic behavior, A) the objective of a bureaucracy is to maximize its own welfare, meaning that it seeks additional power and prestige.
What is the theory of bureaucratic behavior and how can it be used to explain the behavior of the Federal Reserve?
The theory of bureaucratic behavior suggests that one factor driving central banks' behavior might be their attempt to increase their power and prestige. This view explains many central bank actions, although central banks may also act in the public interest.
What is the primary reason that the Federal Reserve System was created?
It was created by the Congress to provide the nation with a safer, more flexible, and more stable monetary and financial system. The Federal Reserve was created on December 23, 1913, when President Woodrow Wilson signed the Federal Reserve Act into law.
Why is the structure of the Federal Reserve considered a compromise between the interests of private banks and those of the federal government?
The primary reason for the creation of the Federal Reserve System was: to reduce or eliminate future bank panics. The many regional Federal Reserve banks resulted from a compromise between parties favoring: a private central bank and those favoring a government institution.
Why does the Federal Reserve System have a high degree of political independence?
Why does the Federal Reserve System have a high degree of political independence? The system is owned by the banks. What banks must join the Federal Reserve System? Which is a service the Fed provides to all banks?
What is monetary policy determined by?
The Board of Governors of the Federal Reserve System and the Federal Open Market Committee (FOMC) determines monetary policy. The key to setting monetary policy is finding the perfect balance – letting the money supply grow too rapidly increases inflation, but allowing it to grow too slowly stunts economic growth.
Is the federal reserve a bureaucracy?
In this paper, the Federal Reserve System is viewed as a bureaucracy with a bureau's incentive to increase expenses beyond the profit maximizing point. Moreover, the bureau consists of divisions, the district banks, that exhibit their own expense-prefer ence behavior.
What is the primary tool that Congress uses to exercise some control over the Fed quizlet?
What is the primary tool that Congress uses to exercise some control over the Fed? The threat that Congress will acquire greater control over the Fed;s finances and budget.
What was the purpose of the Federal Reserve Act quizlet?
The Federal Reserve Act intended to establish a form of economic stability through the introduction of the Central Bank, which would be in charge of monetary policy, into the United States.
Why was the Federal Reserve created quizlet?
The Federal Reserve was created in 1913 to restore confidence in the banking system, regulate and supervise the banking system, and act as a lender of last resort to avert banking panics.
What was the Federal Reserve System quizlet?
Federal Reserve System. The country's central banking system, which is responsible for the nation's monetary policy by regulating the supply of money and interest rates. Monetary Policy. F.E.D's tools to influence economy: open market operations, discount rate changes and reserve requirements.
Which of the following ensures the independence of the Federal Reserve System from political influences?
Which of the following ensures the independence of the Federal Reserve System from political influences? The Fed earns its own income.
Why does the Federal Reserve set the reserve ratio?
The Fed uses this mechanism to reduce the supply of money in the economy and control inflation by slowing the economy down. The Fed also sets reserve ratios to ensure that banks have money on hand to prevent them from running out of cash in the event of panicked depositors wanting to make mass withdrawals.
What are the objective of monetary policy?
The three objectives of monetary policy are controlling inflation, managing employment levels, and maintaining long-term interest rates. The Fed implements monetary policy through open market operations, reserve requirements, discount rates, the federal funds rate, and inflation targeting.
What is monetary policy and fiscal policy in economics?
Monetary policy refers to central bank activities that are directed toward influencing the quantity of money and credit in an economy. By contrast, fiscal policy refers to the government's decisions about taxation and spending. Both monetary and fiscal policies are used to regulate economic activity over time.
What does the bureaucracy consist of?
The Organization of the Executive Branch The federal bureaucracy consists of the Cabinet departments, independent agencies, government corporations, and independent regulatory commissions.
How does the bureaucracy operate?
The federal bureaucracy performs three primary tasks in government: implementation, administration, and regulation. When Congress passes a law, it sets down guidelines to carry out the new policies. Actually putting these policies into practice is known as implementation.
What is the primary tool that the US Congress uses to exercise some control over the Fed?
Congress' primary tool to exercise control over the Fed is to threatening to take back power from the Federal Reserve through its legislative power.
Why is it unlikely that the policy recommendation put forth by the Chair of the Board of Governors would ever be voted down by the rest of the FOMC?
Why is it unlikely that the policy recommendation put forth by the chair of the Board of Governors would ever be voted down by the rest of the FOMC? Even though each person of the FOMC gets one vote, the policy deliberations will undoubtedly reflect the preferences of the chairman.
What did the Federal Reserve Act accomplish?
banking and monetary reform, the Federal Reserve Act of 1913, which created a federal reserve system to mobilize banking reserves and issue a flexible new currency—federal reserve notes—based on gold and commercial paper; uniting and supervising the entire system was a federal reserve board of presidential appointees.
What is the goal of the Federal Reserve?
The Federal Reserve works to promote a strong U.S. economy. Specifically, the Congress has assigned the Fed to conduct the nation's monetary policy to support the goals of maximum employment, stable prices, and moderate long-term interest rates.
What was the main purpose of the Federal Reserve System quizlet?
What is the purpose of the federal reserve? It works to strengthen and stabilize the nations monetary system. It provides financial services to the government, regulates financial institutions, maintains the payment system, enforces consumer protection laws, and conducts monetary policy.
What is the Federal Reserve and what is its role in the US economy quizlet?
the Federal Reserve System supervises and regulates banks : to promote the safety and soundness of the banking system to foster stability in financial markets to ensure compliance with applicable laws and regulations.
In what sense is the Federal Reserve System both accountable to the government and independent of it?
In what sense is the Federal Reserve System both accountable to the government and independent of it? The Board of Governors is a federal government agency, while the Federal Reserve Banks are legally the equivalent of private corporations.
Which part of the Federal Reserve System’s structure ensures that regional main Street interests are represented?
The Board of Governors has broad oversight responsibilities for the operations and activities of the 12 Federal Reserve Banks. As such, the Board of Governors ensures that national interests are represented.
When the Federal Reserve lends reserves to depository institutions it charges them interest that interest rate is called the?
federal funds rate The federal funds rate is the interest rate that banks charge each other to borrow or lend excess reserves overnight. 11 Law requires that banks must have a minimum reserve level in proportion to their deposits. This reserve requirement is held at a Federal Reserve Bank.
How are the specific interest rates for the lending and borrowing markets determined?
Interest rates are determined, in large part, by central banks who actively commit to maintaining a target interest rate. They do so by intervening directly in the open market through open market operations (OMO), buying or selling Treasury securities to influence short term rates.
What is the objective of monetary policy quizlet?
The goals of monetary policy are to promote maximum employment, stable prices and moderate long-term interest rates. By implementing effective monetary policy, the Fed can maintain stable prices, thereby supporting conditions for long-term economic growth and maximum employment.
What are the objectives of monetary policy and fiscal policy?
Monetary policy refers to central bank activities that are directed toward influencing the quantity of money and credit in an economy. By contrast, fiscal policy refers to the government's decisions about taxation and spending. Both monetary and fiscal policies are used to regulate economic activity over time.
What are the objectives of fiscal and monetary policy?
Monetary policy refers to the actions of central banks to achieve macroeconomic policy objectives such as price stability, full employment, and stable economic growth. Fiscal policy refers to the tax and spending policies of the federal government.