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Chapter 14 Central Bank Form and Function

Chapter Objectives

By the end of this chapter, students should be able to:

  1. Define central bank and explain the importance of central banking.
  2. Briefly sketch the history of U.S. central banking.
  3. Explain when and how a country can do without a central bank.
  4. Briefly sketch the structure of the Federal Reserve System.
  5. Explain how other central banks compare to the Fed.
  6. Define central bank independence and explain its importance.
  7. Explain why independent central bankers prefer lower inflation rates than government officials do.