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b. If the route is randomly selected, what is the probability that she will visit the cities in alphabetical order? 16. A class has 11 students who are to be assigned seating by lot. What is the probability that the students will be arranged in order from shortest to tallest? (Assume that no two students are the same height).

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c. An older Puerto Rican family has moved to the suburbs, but still owns a house in Humboldt Park, which now has two apartments. Seeing that rents in the area are going up, they raise the rent from $800 to $1000 a month. i. In one of the units, the existing resident, Ignacio, decides to stay and pay the extra $200 . Is the higher rent that Ignacio pays a negative externality? ii. In the other unit, the existing resident, Carlos, decides that rent is too high and moves to another neighborhood while rents are the same. A new resident, Joanna, pays $1 , 000 for ignacio's old apartment. Is Joanna exerting a negative externality on Carlos?.

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c. From the fourth section, describe the difference between how Fed governors are put into their positions versus how District Bank presidents are put into their position. Which is most closely tied to the political process? d. From the final section, state the ways in which the Fed is accountable to Congress. Checks and Balances The Federal Open Market Committee (FOMC) is the body within the Federal Reserve System that determines monetary policy for the country. The committee consists of up to 19 participants-seven Federal Reserve Board governors (if all positions are filled) and the presidents of the 12 Federal Reserve Banks. The governors are political appointees: They are nominated by the president of the United States and confirmed by the Senate. Governors are appointed to 14-year terms so that appointees serve beyond the tenure of the presidents who nominate them, reducing the likelihood that one president appoints a majority of the governors. Because the seven governors are political appointees, they are intended to be the most directly accountable to the public. The 12 Federal Reserve Bank presidents are not political appointees. Each Federal Reserve Bank has a local board of directors whose members select its regional Bank president. All members of local boards of directors are subject to Board of Governors approval. And, appointments of Federal Reserve Bank presidents are also subject to Board of Governors approval. Because they are not political appointees, the presidents of the 12 Federal Reserve Banks are intended to be insulated from politics and to represent regional interests. The FOMC consists of 12 voting members - the seven members of the Board of Governors (if all positions are filled); the president of the Federal Reserve Bank of New York 8 ; and four of the remaining 11 Federal Reserve Bank presidents, who serve on a rotating basis (Figure 3). All 12 of the Federal Reserve Bank presidents attend FOMC meetings, report on economic conditions in their respective districts, and participate in the policy discussions, but only the five presidents designated as voting members at the tim vote on policy decisions. 9 This structure maintains centralized power but also makes sure that regional interests are represented in policy. The Power of the Purse In the Federal Reserve Act, Congress gave the Federal Reserve the power to earn its own income. This income comes primarily from the interest the Fed earns on the government securities it acquires through open market operations. 10 Because funding can be a way to wield influence, Congress did not give itself the "power of the purse" over the Fed. For example, if the Federal Reserve were dependent on Congress for funding, members of Congress could threaten to cut the Federal Reserve's budget to get the policy decisions they desired. The Fed does not keep all of its earning, however. After paying its expenses and legally mandated dividend payments to member banks 11 the Federal Reserve.

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