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Complexities of the U.S. Financial System - Essay Example
Author : ldubuque
Finance & Accounting
Pages 3 (753 words)
U.S Financial System Name Instructor Course Date U.S FINANCIAL SYSTEM Question 1: Describe how the U.S. financial markets impact the economy, businesses, and individuals. The U.S financial market involves financial transactions that include but not limited to bonds and stocks…
the New York stock exchange and the NASDAQ. The US financial market impacts directly on the economy in that a commodity such as gold is traded in the markets and used to cushion the economy against the negative impacts of inflation (Edwards & Garcia, 2008). According to Meltzer (2009), the financial market impacts directly on business through for example interest rates that among other factors determine the cost capital for businesses. On an individual basis, the capital market impacts individuals in their day to day lives through numerous ways including pension’s funds that have been proven to have a positive correlation to equity prices (Mishkin& Eakins, 2009). Question 2: Explain the role of the U.S. Federal Reserve, the Federal Reserve Chairman, and Board, indicating its effectiveness in today’s economic environment. Provide support for rationale. The Federal Reserve plays the role of executing monetary policies such as stabilizing prices of commodities as well as creating maximum employment opportunities. Being the central US banking system (Meltzer, 2009) it comprises of a chairman and a board, both appointed by the president. The chairman as the head of the Federal system and provides leadership to the board. The mandate of the board is to analyze international financial development as well as regulating federal banks in the US. ...