Fedrial

Federal Reserve Michael Sislian University of Phoenix Federal Reserve The Federal Reserve is the central bank of the United States of America. It is owned both publicly and privately, and is comprised of a number of different branches, which work together to control the supply of money in the in the United States. The Federal Reserve plays a key role in the United States in many ways one is interest rates and laws on how banks need to operate. Function of Money The purpose of money is for a medium of exchange for goods and services. The function of money throughout the world is to devise an artificial value as medium used to evaluate a service or goods. Typically the value of money can be set by government, gold, or market conditions. The central bank of the United States manages the nation's monetary system by either increasing or decreasing the monetary supply which in essence can increase or slow down inflation, affect interest rates, and control the rate in which goods and services increase in evaluation in relation to one another. Central bank manage the nation's monetary system The central bank manages nation’s monetary system in several ways; one of the ways is by controlling the money demand which affects interest rates and inflation. This is done by decreasing money supply when inflation is high and increasing the money supply when interest rates are too high. The central bank influences this interest rate through these two tools of monetary system, discount rate, and reserve requirements. Discount rate is the rate banks are charged for loans received from the Central Bank. “The reserve requirements are the amount of funds that a depository institution must hold in reserve against specified deposit liabilities” (FED Reserve). Monetary policy in the United sates As of march 16, 2010 that central bank has released the following monetary policy. Unemployment rate are decreasing and economic activity has continued to strengthen. Businesses have start spending money on new software and equipment. However the housing market is still slow and the new hire of employees is a much as the central bank would like it to be. The central bank also is going to keep rates at 0 to 1/4 percent when lending money to banks. “Federal Reserve has been closing the special liquidity facilities that it created to support markets during” (Fed Reserve) this that show that the central bank confident that we are all most out of the recession. The central bank will monitor the economic outlook and financial developments and will change anything that needs to be changed in order to get the economic outlook back to track. Monetary policies on the economy's production and employment One of monetary policies is taxation a increase in tax mean less income for a family. the second way monetary policies affect employment is by lowering interest rates this means bank borrow more money in return business get loan for expansion and are able to hire more work force. If the Fed is forced to increase in interest rates then that would cause fewer funds available to banks less business expansion and decreasing employment rates. The Fed will do what every in their power to keep the GDP in American high as possible. Inclusion the Fed has more power and influence on financial markets than any legislative party. The central bank works for the people any decision that is made by the central bank is to help the American people. Sometime we might not agree with a decision that the central bank made but in the long run the American people will notice that it was the right decision. Works Cited Federal Reserve. (n.d.). Retrieved April 1, 2010, from Federal Reserve: http://federalreserve.gov/default.htm Schauf, T. D. (1988, November 2). The Federal Reserve Is A PRIVATELY OWNED . Retrieved April 2, 2010, from apfn: http://www.apfn.org/apfn/Fed_reserve.htm