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Indian Economic Policy

Notes (iv) The impact by the U.S. president is felt most on the Federal Reserve Board by the fact that the
(a) president is a member of the Board.
(b) Board is a cabinet department in the executive, giving the president complete control
over Federal Reserve operations.
(c) president nominates Board members to a fourteen year terms.
(d) president becomes a member of the Board after he leaves office.
(e) Board actions may be vetoed by the president, just like congressional legislation.
(v) Which of the following tools is used by the Federal Reserve to regulate the nation's money
supply and control interest rates?
(a) discount rate (b) selling U.S. government securities
(c) buying U.S. government securities (d) reserve requirements
(e) all are correct
(vi) If the Federal Reserve Board wanted to increase the money supply, it would probably be in
response to
(a) their concern for inflation. (b) the need to stimulate the economy.
(c) the need to "slow down" the economy. (d) an order by the U.S. Supreme Court.
(e) a demand from Congress or the president of the U.S.
(vii) An example of an application of "commercial Keynesianism" would be the
(a) Congress and the president increasing military and social welfare spending.
(b) Federal Reserve Board selling U.S. government securities.
(c) Congress and the president passing a tax cut.
(d) Federal Reserve Board lowering the discount rate.
(e) all of the above
(viii) Which staff agency was created to assist the president and handle the details of budget
preparation?
(a) Congressional Budget Office (CBO) (b) Department of Treasury (DOT)
(c) General Accounting Office (GAO) (d) Department of Commerce (DOC)
(e) Office of Management and Budget (OMB)
29.3 Summary

• The term Bureaucracy was coined by M de Gournay, an economist of France, in the 18th century.
He referred to it as “a fourth or fifth form of Government”.
• The characteristics of bureaucracy were first formulated in a systematic manner by the German
Sociologist Max Weber (1864-1920). According to Weber, there are three types of authority, viz.,
traditional, charismatic and legal-rational (bureaucratic).
• The understanding of Public Administration would help in knowing how this bureaucracy
runs the administration to put the economic policies into action to deliver the benefits of economic
policy.
• Development administration was introduced to manage new activities such as economic policies.
This was necessary because the Government has been entrusted to manage economic and
business activities and hence it was found difficult to manage the economic policy with the
traditional administration as it has the experience of mostly dealing with law and order and
justice.

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