The Federal Reserve

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by acex127
Last updated 6 years ago

Social Studies

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The Federal Reserve

What is the FED?

Three Major Instruments of Monetary Policy

The Federal Reserve

•They monitor and regulate banks and other financial institutions to make sure that the banks are loaning money appropriately •Watches the financial market for any risks•Major role in the nation’s financial services in domestic and foreign payment system • They monitor the nations monetary policy by influencing the money and credit conditions in the economy

Goal is to assist the economy in achieving a balance in the business cycle.This means using the money supply to stabilize output, employment and price level.

Explaination Monetary Policy

Monetary Policy

Function of the FED

- Alexander Hamilton started the idea of First Bank of United States- Bank frightened many people and after the renew of the charter failed in 1811, it closed- Second Bank of the United States idea was brought up-It was similar to First bank but bigger- Like the first one, a lot people were scared of it because of its immense power- When the renewal of the second bank came, it failed- Because the banks loaning out loans to everyone and no one is paying it back, the US dept increases dramatically.-In early 1900s, the National Monetary Commission was created to control and change the banking system- In 1913, the Federal Reserve Act was created to create money and supervise the banking of the US

1. Open Market Operation- buy and selling of government bonds2. Reserve Requirement - influences banks' ability to lend money and how much money a bank should have in thier vault3. Discount Rates - rate interest on loans to banks from the Fed

History of FED


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