1  Which body is more important within the Federal Reserve System, the Board of Governors or the Federal Open Market Committee? Briefly explain.

2  What changes did the Dodd-Frank Act make to the Fed?

3  Why did Congress pass the Federal Reserve Act in 1913, when the United States had functioned without a central bank since 1836?

4  Briefly discuss the main arguments for and against the Fed’s independence.  What is you opinion?  (This should take a page or two to answer the question.)

5  How does the monetary base differ from the money supply?

6  What are the key differences between the simple deposit multiplier and the money multiplier?

7  Briefly explain whether under normal circumstances the money multiplier will increase or decrease following an increase in each of the following:

a.       The currency-to-deposit ratio (C/D)

b.      The excess reserves-to-deposit ratio (ER/D)

c.       The required reserve ratio (rrr)

8.  In a short essay (several paragraphs)  compare and contrast the three primary tools of monetary policy.  Be sure to include an evaluation of whether those tools would be most useful to fine-tine the money supply or would be more appropriate to make more dramatic changes.  In addition, briefly discuss the new tools of monetary policy and why they are now needed.