ECO 212 Week 5 IA Federal Reserve Paper
ECO 212 Week 5 IA Federal Reserve Paper
CSU - Dominguez hills
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Date Created: 11/16/15
Federal Reserve 1 Running Head FEDERAL RESERVE Federal Reserve Name University of Phoenix Federal Reserve 2 Federal Reserve Introduction The monetary policies and monetary system of all organizations of the United States are strongly governed by their Federal Reserve With that this paper will cover all aspects of the monetary system in the country and how they are being managed by the Federal Reserve Moreover this paper will also explore the many roles of money in a certain state It would also be the interest of this paper to find the kind of direction that the Federal Reserve of the United States of America give the entire country s economy These monetary policies have a direct impact on the production and employment rate of a country which will also be covered in this paper Function and Purpose of Money Humans have been using money for almost all their lives It this highly commercialized world it is almost impossible to survive without money However there was still a point in history when people lived without money and that period was sporadic simply because people did not have a fixed material to exchange for the commodities they need Barter was still the major mode of acquiring commodities during that time when money was not yet invented Throughout the years as things started to be more modernized money became the major medium for trading and commodity exchange federalreserve gov 2010 Truly money has made various transactions more efficient for the people Aside from that money have evolved to be the main component in regulating in ation or de ation Management of the Monetary System Federal Reserve 3 As previously mentioned it is the Federal Reserve of the United States of America that is responsible for the monetary system of the country However the one that is really focused on the actual managing and networking task is the Central Bank In instances of de ation the Central Bank would then reduce the interest rates so that the supply of money in country would increase On the contrary if there is an anticipated in ation the Central Bank also has the control to increase the interest rate as their wait of preventing it from further compromising the economic status These two activities are mainly the activities of the Central Bank and their basic method of regulating and managing the monetary system of the country Recent Monetary Policy Monetary policy are made by the government and are basically done to save the United States of America from any form of financial instability This is what the current monetary policy is all about as well The Federal Researve creates a direction that will prevent USA from encountering another round of financial crisis as what occured in the past In fact this sitation still has its negative remnants in the country until now thus the Federal Reserve should really try to avoid such circumstance from happening again Policy Actions Confirming the Direction One of the ways of Federal Reserve of making sure that they are headed towards the ideal direction is to closely monitor the banks and make sure that their loan granting is always in accordance to the set procedure The careless giving out of loans was the main reason for the financial crisis that United States faced and this should be a reason enough for the banks Because of that the Federal Reserve should come up with fixed policies for the banks to follow to avoid any similar downfall Federal Reserve 4 Monetary Policy Effects on the Economy39s Production and Employment It was previously emphasized that whatever monetary policy that the Federal Reserve comes up with will have a direct effect on the employment and production rate in the country The Federal Reserve actually has a total control over the interest rate depending on the condition of the economy Increasing the interest rates mean that the money supply in the country is low and it can reduce the employment opportunities and production output However if the interest rate is decreased the supply of money will also increase which is more benefecial for the employment and production rate in the country Conclusion With all this it is already an established fact that the Federal Reserve of United States of America truly plays a very crucial role in the economic condition of the entire country Money indeed makes the world go round because it has become the major medium for commodity exchange It has also been used to put value on specific commodities Creating the monetary policy should be done critically and carefully because it can have a significant effect on the country and its people Federal Reserve 5 Reference Federalreserve gov 2010 Monetary Policy Retrieved August 12 2010 from httpWWWfedera1reservegovmonetarypolicydefaulthtm
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