The Federal Reserve is considered by experts to be a government agency that is
A) totally independent from the rest of the federal government.
B) semi-independent from the rest of the federal government.
C) closely tied to Congress.
D) subservient to the interests of large money-center banks.
B
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A serious consequence of a financial crisis is
A) a contraction in economic activity. B) an increase in asset prices. C) financial engineering. D) financial globalization.
Return to the case of Jan, the hyperbolic discounter from the previous question. Suppose she can sign a contract that requires her to give up money equivalent to a loss of X utils if she does not undertake the action. Assume she does not behave consistent with her plans without this contract. How high would the contractual value of X have to be to prevent her inconsistency?
a. C – B/2. b. B. c. C. d. B + C.