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Consider the role of the Fed in the economy and respond to the following:

  • What are the best goals for the Fed? Why?
  • How does the structure of the Fed insulate monetary policy decision makers from political pressure?
  • How does the fractional reserve system limit a bank's ability to create money?
  • What is the difference between the federal funds rate and the discount rate? Be sure to explain differences in how these two rates are determined.

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