The Economy and the Federal Reserve

In: Business and Management

Submitted By msmontie
Words 1225
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Running head: THE ECONOMY AND THE FEDERAL RESERVE

The Economy and the Federal Reserve
Montsenia Taylor

Abstract
Knowing the purpose of the creation of the Federal Reserve Bank, and its role in monetary policy will aid in understanding why government feels it necessary to have a decision in economic growth of our economy. Different indicators provide the government with short and long term forecasts of where the economy is heading in growth at present and in the near future. Analyzing previous history can provide a map that allows for adjustments that may be needed for future growth of the economy and strength in the dollar.

The Economy and the Federal Reserve Many Americans may think that The Federal Reserve Bank is just another bank, trying to persuade Americans to open up checking account by offering free checking. The Federal Reserve Bank is not open to the public for individual deposits; it’s the bank for banks. The Federal Reserve Bank is the bank of the United States. It is run by a Board of Governors that over see and influence interest rates through a monetary policy. In this paper the author will introduce the readers to the current Board of Governors, and provide a job description of their duties. By understanding the Board of Governors job duties will show how they are directly related to the economies past and current condition. Through the monetary policy the Board of Governors aim to steer the economy in a direction towards growth, but sometimes their changes in the policy can lead to high inflation, higher unemployment rates which could reflect an economy in recession. A yield curve can help determine the state of an economy and could be used to make adjustment to the current monetary policy to redirect the economy in the right direction but focus should not be restricted to one indicator, because other indicators deem useful in…...

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