Federal Reserve

Federal Reserve

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Federal Reserve

The Federal Reserve System is the central banking system for the United States of America. The Federal Reserve System wants to take control of the economy by raising interest rates on the money supply. Money serves as medium of exchange, as a store of value, and as unit of account. This synopsis will try to explain how the central bank manages a nation’s monetary system. Outline the stated direction of recent monetary policy in the United States of America; list at least one policy action that the Federal Reserve has taken to confirm that direction. This Summary will also enlighten the reader on the effects of monetary policies on the economy’s production and employment.

The central bank is the center of the nation’s financial system. The Federal Reserve supply businesses with money and electronic funds transfer and check-clearing technology. It provides financial services for the United States Department of the Treasury; the Federal Reserve also administers laws to protect they money of consumers. Protecting the consumers’ money is extremely important. The consumers money is used by the banks to lend to other clients so the banks can charge interest and stay in business. If the United States did not have a central banking system the country could go into a depression, and cause a banking panic. A central banking system is necessary; it keeps the country financial system at an even growth and individual’s money protected.

The central bank determines monetary policy. It controls the growth rate and the interest rates of money and other articles of value. According to The Federal Reserve web-site “the amount of money businesses spend on equipment and software is rising, while investments in nonresidential structures are still weak. Employers remain reluctant to add to payrolls. The housing sector continues to depreciate. Although commodity prices have risen, long-term inflation expectations have remained...