Banking and Investing D.

Turner Federal Reserve

So You Want to Be in Charge of Monetary Policy:

Directions:
Go to http://www.frbsf.org/education/teacher-resources/what-is-the-fed/monetary-policy to answer the following questions 2. What is monetary policy? Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest to attain a set of objectives oriented towards the growth and stability of the economy.

3. Explain the Federal Funds Rate. In the United States, the federal funds rate is the interest rate at which private depository institutions (mostly banks) lend balances (federal funds) at the Federal Reserve to other depository institutions, usually overnight. 4. How does the Federal Funds rate affect credit conditions? It affects credit by money say if you take a loan out for a very large amount they are going to need that money to be made so they call the federal reserve bank and take and order to make money. 5. Can the Federal Reserve control inflation? The Fed's astoundingly large increase in reserves has many worried about future inflation and wringing their hands over exit strategies. 6. What conditions cause the Federal Funds rate to increase or decrease?
The key to attaining the Fed's goal of changing the growth rate of GDP lies in long-term interest rates. Changes in long-term interest rates create a response in business investment activity and consumer borrowing. Lower interest rates reduce the cost and increase the profitability of borrowing through the present value calculation

7. HThe Federal Reserve System's structure is composed of the presidentially appointed ... 1.1.1 Elastic currency; 1.1.2 Check clearing system; 1.1.3 Lender of last resort .... The Federal Reserve System was designed as an attempt to prevent or ... away from lenders and borrowers and places it on others in the form of inflation. ow does the Federal Reserve keep inflation in check?

8. What is expansionary monetary policy? Expansionary monetary policy is monetary policy that seeks to increase the size of the money supply. In most nations, monetary policy is controlled by either a central bank or a finance ministry. 9. What is accommodative monetary policy? Federal Reserve System policy to increase the amount of money available to banks for lending. See: Monetary policy. 10. What is the FOMC? The Federal Open Market Committee (FOMC) 11. What is the current national debt? The estimated population of the United States is 316,577,554 so each citizen's share of this debt is $52,902.80.

The National Debt has continued to increase an average of $2.02 billion per day since September 30, 2012! 12. What type of temporary non-traditional tools does the Federal Reserve use to control inflation? Traditionally, the Fed has implemented monetary policy primarily through open market operations involving the purchase and sale of U.S. Treasury securities.
The key to attaining the Fed's goal of changing the growth rate of GDP lies in long-term interest rates. Changes in long-term interest rates create a response in business investment activity and consumer borrowing. Lower interest rates reduce the cost and increase the profitability of borrowing through the present value calculation

The key to attaining the Fed's goal of changing the growth rate of GDP lies in long-term interest rates. Changes in long-term interest rates create a response in business investment activity and consumer borrowing. Lower interest rates reduce the cost and increase the profitability of borrowing through the present value calculation