Federal Reserve Paper
Joshua R. Willis
October 19, 2011
Federal Reserve Paper
Money, the main topic of the majority of discussions, debates, and arguments in the United States today. These days it seems people in the United States are more focused on who has too much money and who does not have enough. Granted money is required for just about everything these days. It is hard to believe that at times in our country’s history money was not used. At those times people used to trade goods with each other to receive the goods or services they needed. This raises an in interesting question, why is money so important and necessary? Therefore, this paper will look ...view middle of the document...
Because money is constantly exchanging hands there had to be a way to monitor the monetary system. The central bank is responsible for managing a nation’s monetary system. The central bank is also commonly referred to as the Federal Reserve System. The Federal Reserve System is comprised of 12 regional banks in major cities around the United States. The central bank manages the nation’s monetary system by supervising and regulating banks, implementing monetary policies through the buying and selling of United States Treasury bonds, and determining interest rates. Monetary policies are important will steer the nation in a certain direction.
Monetary policies are actions taken by the Federal Reserve to manage interest rates and the money supply in order to follow the objectives of a macroeconomic policy. The direction of monetary policy in the United States is to lower unemployment levels and raise the level of Gross Domestic Product (GDP). Also the housing market is still depressed. Unfortunately, many people still owe more on their mortgages than their houses are worth. Plus the housing market is still loaded with many empty houses. People are just not seeking mortgages the way they did before the recession. The direction that monetary policy is taking is to improve these areas that are still of concern. Monetary policies can also affect an economy’s production and employment.
Monetary policies can affect an economy’s production and employment in several ways. Monetary policies can raise and lower interest rates, which will affect demand for goods and services....