This website uses cookies to ensure you have the best experience. Learn more

Federal Reserve And Inflation Essay

861 words - 3 pages

PAGE PAGE 3 Federal Reserve and Inflation
Federal Reserve and InflationJennifer MyersWestern International UniversityECO/301 Economic TheoryGloria PearsonFebruary 25, 2007What exactly is the Federal Reserve? The Federal Reserve is an agency that is responsible for regulating the system using fiat money. Fiat money is notes issued by the fed. The Federal Reserve is a central bank that oversees the banking system and regulates the quantity of money in the economy. There are other central banks in other countries such as the Bank of England, Japan and European Central. These banks regulate and ensure the health of the banking system and control the amount of money available to the economy. The fed acts as a banks bank. Banks sometimes have financial troubles and make loans just as consumers make loans. (Mankiw, 2004 p.634)Do the effects of natural disasters such as hurricanes cause inflation or deflation? I believe it can cause both. People have lost their jobs and homes. There is also the lost of jobs from companies that will not be rebuilding. Money will become more valuable to people who are affected by natural disasters because of the loss of jobs. The economy will inflate or deflate and be stimulated because it has to be replaced. Natural disasters destroy business and homes. The price for materials and labor to rebuild will increase because of supply and demand. The prices on homes for sale will increase and the cost for insurance on homes in flood areas will rise. (Mankiw, 2004 p.656)Who is in charge of the Fed? The Board of Governors of seven members appointed by the president and confirmed by the senate runs the Fed. Among the seven members is the chairman. The Federal Reserve System consists of a Federal Reserve Board in Washington D.C. and 12 regional Federal Reserve Banks located in major cities around the country. Regional bank presidents are chosen by each banks board of directors. The banks members are chosen from the banking and business community. The fed is a very important institution.The chairman is an important person whom makes decisions that affect the economy. (Mankiw, 2004 pp.634, 635)Do voters have a say in the implementation of monetary policy? No, monetary policy is decided by the Federal Open Market Committee and Government. The FOMC consists of seven members of the Board of Governors, in which five get to vote. The FOMC meets about every six weeks in Washington, D.C., to discuss the condition of the economy and consider changes in monetary policy. The government can influence the economy with monetary and fiscal policy. Through the FOMC, the feds can...

Find Another Essay On Federal Reserve and Inflation

Money, the Federal Reserve System, and Banking

722 words - 3 pages Money, the Federal Reserve System, and Banking You have used money to measure the price, the size of business, total output in the economy, and income. Coins and paper money are called currency. People use currency daily. When you go to a movie, you probably buy a ticket with currency. Coins and paper money work well for small purchases and when payment is made directly from one person to another. But, for large purchases or when

Monetary Police and The Federal Reserve

863 words - 4 pages According to David Nicklaus of the St. Louis Post-Dispatch in the article published 21 March 2014 “Fed’s unemployment goal turned out too easy to reach; Guidance is less quantitative and may be hard for market to understand,” last month the target unemployment rate set only fifteen months ago by the Federal Reserve was reached and is expected to further increase by .2 percent within a month. This goal was set with intentions to measure the

The Financial Crisis of 2007-2008 and The Federal Reserve

3067 words - 13 pages , 2010) The first is the economic function. Therefore, the Federal Reserve should try to keep macroeconomic stability, low inflation and avoiding big economic recessions and swings. The second function is the financial stability function. The Federal Reserve should try to keep the financial system working well, prevent and solve financial crisis. (Bernanke, 2010) The Federal Reserve has 3 sets of tools to achieve these goals. Firstly, when the

The advancement, development and integration of the Federal Reserve System

739 words - 3 pages Since its creation on December 23, 1913, the Federal Reserve System--which, in generalized terms, is America's central bank--has greatly benefited the United States' economy. Toward that end, the Federal Reserve System has created and maintained many services for both the government and citizens of the United States; these services include the regulation of financial institutions, maintaining of the payments system and consumer protection laws

The United States Treasury and The Federal Reserve

2009 words - 8 pages are unique, maybe you have. And I am prepared to give you the answers.The Federal Reserve is the central bank in the United States. A central bank is a bank that manages a countries (in this case the United States) money supply, state currency, and interest rates. The U . S . Congress established three key objectives for monetary policy in the Federal Reserve Act: Maximum employment, stable prices, and moderate long-term interest rates. The first

Issues Americans Cannot Understand: The Federal Reserve and the Economy

1663 words - 7 pages Over the last 3 years the United States has seen an incredible flux in the economy from an all time high, to the lowest position since the Great Depression. Many Americans have no idea why or how these cycles affect their everyday lives, most importantly, they do not understand how the government intervenes to control these issues. Most people cannot comprehend the complexity of the United States banking system, how the Federal Reserve (FED

Basic Economics: The Federal Reserve Board; Monetary and Open Market Policies

918 words - 4 pages their money, too much money will be available, thus the value of money goes down in which prices will go up, a process called inflation. Amazingly deflation occurs when there is not enough money available and the price drop and no one can get enough money to pay for goods. In conclusion when the Federal Reserve Board decides to increase the interest rates the amount of money that banks will consume will decrease and so will the money in

The Federal Reserve Bank and the Decline of the U.S. Economy

3539 words - 14 pages whether or not there is a causal relationship between the Federal Reserve Bank’s monetary policies and the decline of the U.S. economy. I will do this through a brief analysis of the history and role of this institution, in addition to the central banking system in general. In turn, I will argue that the reckless and intentional manipulation of the economy by the Federal Reserve Bank, through inflation and the abolishment of the gold standard, has

The federal Reserve and the Beige Book: How information might affect the decision to raise interest rates

1080 words - 4 pages a very uneasy market at a very fine balance by basically flooding the market with lots of cash. By making it so cheap to borrow money, and unattractive to save, this has fueled the consumer spending marathon. This causes an increase in demand which helps keep the unemployment rate down. Alan Greenspan and his colleagues at the Federal Reserve have spent their professional lives fighting inflation and trying to maintain the economy. But in

Analysis of the likely impacts of the 2003-04 Australian Federal Budget on Australia's economic growth, unemployment and inflation

1240 words - 5 pages 1. IntroductionThe government implements its macroeconomic policy using two main tools; fiscal policy and monetary policy. Government macroeconomic management is designed to minimise fluctuations in the business cycle so we can experience good growth, low rates inflation and relatively stable unemployment (Sloman, J. and Norris, K. 2002; . Fiscal policy refers to the government's choices regarding the overall level of government purchases or

The Federal Reserve and Money Supply If "taxation without representation" could rally the colonists against the British Crown in 1776, tight money and ruinous interest rates

3767 words - 15 pages Reserve System and the Federal Open Market Committee should seek "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates" (Board 17). The Fed's ultimate goals are also related to the objectives laid down by Congress in the Employment Act of 1946 ("maximum employment, production, and purchasing power"). The Board of Governors, however, seems to set a narrower policy target (zero-rate inflation

Similar Essays

The Federal Reserve Board And How They Combat Inflation

2436 words - 10 pages banking system of the United States." ( Paul P. Cret, who was also one of the designers of the Pan American Union Building, designed the building and construction began in 1936 in the wave of construction that followed the Depression.Executive SummaryThe Federal Reserve Board combats inflation through using three tools of monetary policy. Open markets operation, the discount rate and reserve requirements. Monetary Policy refers to the

Inflation Target For The Federal Reserve

1536 words - 6 pages with exercising monetary policy to insure "maximum employment, stable prices, and moderate long-term interest rates" (Simpson, 1). The Federal Reserve is he central bank of the United States. Many central banks in foreign countries have only a single policy objective; maintaining the inflation rate of their currency at the level that they dictate. "The Bank of England and the European Central Bank" (Guha) both take this approach to monetary

Federal Reserve System And Monetary Policy

1363 words - 5 pages from the public groups and trade organizations. Hence the Federal Reserve was born. It was meant to be a politically autonomous institution that would provide stability to the financial system, protect the supply of money against inflation. It was also meant to maintain credit when required by injecting stimulus as the economy drove downhill and to withdraw it when faced with sustainability issues. This move was synonymous to providing dollar

Federal Reserve System And The Great Depression

972 words - 4 pages FlemingJordan FlemingMr. Alex Blumenstock07 October 14ENGL 1010The Federal Reserve System and the Great DepressionThe Federal Reserve System impacted many major economic situations of the United States during the 20th and 21st centuries. One example of this impact occurred during the Great Depression of the 1930's. This paper will analyze how the Federal Reserve System stimulated the creation, continuation, and end of the Great Depression.The