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... The Federal Reserve Bank (Fed) manages monetary policy for the United States. ...
The Federal Reserve System is the central bank of the United States. It was created in 1913 with the signing of the Federal Reserve Act (U. ... The goal of this act was to establish Federal Reserve Banks, furnish an elastic currency, provide means of rediscounting commercial paper, and establish effective supervision of United States banking. The Fed is made up of a Board of Governors consisting of seven members and twelve Federal Reserve District Banks. Stemming from the Fed is the Federal Open Market Committee (FOMC) consisting of the Board of Governors, the president of the Federal Reserve Bank of New York and four Federal Reserve Bank presidents rotating one year terms. ... This ensures that the system operates within the framework of the general economic objectives of government policy. ...
The first tool used by the Fed to implement monetary policy is the control of reserve requirements. Reserve requirements are the minimum percentage of deposits a bank can keep in reserves. By changing reserve requirements, The Fed can increase or decrease money supply. ... Open market operations are the purchase and sales of United States Treasury and federal agency securities. ... It determines the federal funds rate thus affecting monetary and financial conditions leading to influences in employment, output and prices. ... The Board of Governors is responsible for the discount rate and reserve requirements, and the FOMC is responsible for open market operations. ... Finally, they would hold the federal funds rate as it is for as long as needed to keep 2003 investors from worrying about a sudden jump in interest rates down the road.
Approximate Word count = 1273
Approximate Pages = 5.1
(250 words per page double spaced)
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