Federal_Reserve

Federal Reserve Donna McNeely ECO212 September 5, 2010 Jong Yi Federal Reserve Money serves three key roles: a medium of exchange, Money helps bring ease and organization to our economy. People are agreeable to take exchange for the productivity they have produced and have accessible. A good example would be a farmer sells his crops for money and in turn he buys clothes, food, and car and so on. A unit of account or a standard of value, Money can be used as a general item so that prices of services and goods can be set. So if someone wants to buy a new car they don’t have to determine how much it will cost. Instead of having hundreds of different prices for a car one price is set in terms for goods and services. A store of value for future use Instead of spending it you can save it to use later. You don’t want to lose its acceptability just because you wanted to save it. People can also put their money into stocks or bonds to be able to save. Money helps our economy to work more easily. It makes the trading process easier. It helps us save for the future. The Federal Reserve System Is the Central Bank of the United States which manages the supply of money and credit. It also the center of the nation’s financial system. It keeps everything moving with money and payment services. They are bankers to the Feds. Providing services for Department of the Treasury. It also administers protection laws. Without a Central Bank role as a money manager, the nation's financial system would be diverse and matter of uneven growth as a result. Money and credit is the heart of the economy; they are hoping to create jobs, and business growth. One action the Federal Reserve has taken is to improve market functioning and to push long-term interest rates lower through its large-scale purchases of agency debt, agency mortgage-backed securities (MBS), and longer-term Treasury securities, of which the Federal Reserve currently holds more than $2 trillion. By the Federal Reserve's purchases of longer-term securities affect financial circumstances by changing the magnitude and mix of financial assets held by the public. The Fed's plan is counting on the assumption that unlike the assets those changes in the net supply of an asset available to investors affect its yield and those of broadly similar assets. There are four components when comes to the production of goods and services. Labor, capital, Natural Resources and Entrepreneurship. The quality and quantity in lobar is a very important factor in determining the economy’s level of production rate and growth. Labor is the person that produces the goods and services Capital is where the people produce the goods and services. Natural Resources are things from nature like water and land combined to the production process. Entrepreneurship is ideas inventions or services that pool the other components together to bring a new process. These are all brought together to produce gross domestic products or the output of goods and services. Without these components we would have no industry or business to meet the needs of the people. The Federal Reserve must consider all of these recourses to determine the nation’s monetary policy. It is very important to use skills effectively and training people to meet the demands of the market. The market operates to find good matches between jobs and workers. Sometimes in the economy it is difficult to match searches in the market. If the economy is slow this can mean falling wages and unemployment. The good thing with the labor market is that it has mobility. People can move any where to find and train for a new job. This helps the employer find good matches. Sometimes people do not want to move or don’t want to train for a new job. This will cause jobs to be unfilled so the economy slows down and people stay unemployed. http://www.federalreserve.gov/newsevents/speech/bernanke20100827a.htm FBR. (2010). Board of Governers ot the Federal Reserve System. Retrieved from http://www.federalreserve.gov/monetarypolicy/mpr_default.htm FRB. (2010). Federal Reserve Bank of Dallas. Retrieved from http://www.dallasfed.org/educate/everyday/ev8.html