The Federal Reserve System is the United States bank. Was created in December 23, 1913 by the congress to provide the nation with a better and stable monetary financial system. The Federal reserve’s is responsible for directing the nation’s monetary policy by persuading money and credit conditions in the economy in tracking down of full employment and stable prices ("Board Of Governors Of The Federal Reserve System", 2014).
Also regulates and supervises banks financial institutions to ensure the safety of the nation’s banking and financial system to protect the credit right of consumers and to offer some financial services to the U.S. Government, U.S. financial institutions, and ...view middle of the document...
The Quantitative easing tools are tools that raise the money supply but do not affect the Fed funds rate. The purpose of this tool is to lower interest rates and outgrowth economy (Colander, D. C. (2010).
The open market would buy and sell the U.S. treasury securities. The discount rates charges can be adjusted by the Federal Reserve to banks for lending money. The Federal Reserve Requirements would adjust the money amount that banks are allowed to have on their facilities.
The stimulus program is a package of economic measures used by the Federal Reserve to improve the economy growth. The main goal of the stimulus package is to revive the economy and prevent or inverse a recession thru spending and employment according to “Investopedia (2014).”
Stimulus program affects the Federal Reserve money supply because the reserve balance in macroeconomic models often comes through the money multiplier, affecting the money supply and the bank lending. The money growth in the reserve balance recommends a need to reconsider the connection from reserves to money and bank lending (“Money, reserves, and the transmission of monetary policy: Does the money multiplier exist?”...