Describe the necessity for the Board of Governors within the Federal Reserve Banking System to maintain some isolation from public policy (politics).

Macroeconomics Econ 231 Monetary Policy assignment ____________________________________________________

Answer the following questions and attach for submission.  Make sure to give full and complete answers with support.  Explanations should be a minimum of 5-6 sentences each.

o If the Federal Open Market Committee is not allowed to simply declare Interest Rates, what authorities do they have?  How do these lead to changes in the interest rate you pay?

o Go to the “Board of Governors of the Federal Reserve System” page (there is a link provided under the reading list).  Open the statement provided from the most recent FOMC meeting and explain their current outlook on Economic Growth.  What are the positives and negatives they have identified?

o What is the dual mandate of the Federal Reserve?  How are these two things consistently at odds?  Explain.  How does this make the job of the Federal Reserve tricky?  Explain.

** Hint:  You’ll need to find the Dual Mandate on the Federal Reserve’s website.  It may also be helpful to research the intent of the mandate.

o Describe the necessity for the Board of Governors within the Federal Reserve Banking System to maintain some isolation from public policy (politics).  What protections are they afforded to help avoid the issue of political persuasion/corruption?  Why might these protections also be counterproductive?

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