The Federal Reserve Board

College
Essay
Miscellaneous
Pages 2 (502 words)
Download 0
The Federal Reserve Board, commonly called the Fed, is the federal banking system, its governors, and its regulatory mechanisms. It has a board of governors known as the Federal Reserve Board, regional banks, and smaller banks that own shares in the federal system…

Introduction

The Federal Reserve Board

One of the primary functions of the Fed is to stabilize the economy. There is some debate about when the Fed should act as a stabilizing force and when it should act as an energizer or cooling factor. However, generally the Fed tries to maintain a stable growth rate, low inflation, and optimize the unemployment rate.

Controlling the money supply and the interest rate regulates these factors. By lowering the interest rate, money is easier to borrow and the economy picks up steam. However, this may also create inflation. By raising interest rates, the money supply contracts and inflation falls. At a recent meeting, the Fed left the interest rate alone saying they were more concerned about inflation than a weak economy (Fed Leaves). However, with falling inflation there is a risk of rising unemployment. The Fed carefully balances these variables to keep the economy on an even keel.

The Fed can also increase the money supply by increasing the reserves held by banks that loans are drawn against. This will make more money available. By reducing the reserves, it tightens the money supply. They also regulate the currency supply that has a minimal effect on the economy.

The Federal Reserve Board is headed by the Federal Reserve Chairman, currently Ben Bernanke. The Chairman has considerable influence on the direction of the board and the economy. Their individual philosophies on inflation and the best ways to control the economy can have a great effect on the working class. ...
Download paper
Not exactly what you need?

Related papers

Federal Reserve and the Open Market
government, and foreign official institutions, including playing a major role in operating the nation's payments system (Federal Reserve, 2006).…
Federal Reserve Board
But when we talk about of United States which is world's largest economy then the monetary policy of the country also expands its impact on in form of economic and financial effects on other countries of the world. In shortest possible definition the main objective of a monetary policy is to look into various aspects of the economy of a nation ranging from inflation; economic output; to…
Monetary Policy
The Federal Open Market Committee (FOMC) is group within the Fed that meets several times a year to adjust the interest rates. Lower interest rates will increase demand for products and can stimulate the economy. For example, a decrease in interest rates lowers the cost of borrowing which leads to an increase in investment spending. It also leads families to buy automobiles, houses, and durable…
Federal Reserve: iInflation
It also acts as the bank's bank, meaning that the Fed is the lender of last resort to banks that need to borrow money to maintain stability. Fed's second and most important task is to control money supply. A special committee at the Fed Reserve - the Federal Open Market Committee - directs the US monetary policy.…
The Federal Reserve System
The Federal Open Market Committee (FOMC) consists of the Board of Governors and Federal Reserve Bank Presidents. The FOMC is the monetary policymaking body that creates policy designed to stimulate economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments. It makes responsible decisions concerning the open market operations. In addition, the…
The Federal Reserve Board
The Federal Reserve Board …
Inflation
There have been cases around the globe known as hyperinflation. Though there is no official definition for it, it is generally accepted as a 50% annual inflation rate. Ecuador suffered through a 96% inflation rate in 2000 ("Background Note: Ecuador"). This was caused by a weak economy, massive debt from El Nino in 1998, and a floating currency. The president was ousted in Jan. 2000 and caused a…