- 1-Choose an individual perspective, such as a college student, business professional, new investor, etc., then explain which of the objectives on monetary policy you would like the Federal Reserve to focus on in the coming years? How might this be different if you chose a different perspective?
- 2-The Federal Reserve chair is often referred to as the most important person in the financial system. Why do you think this is?
- 3-How did the Federal Reserve System try to solve problems from the National Banking Act? Was it successful? Explain.
- 4-Describe the current Federal Reserve structure. Include the Board of Governors, regional reserve banks, those banks’ branches, and the Federal Open Market Committee. How does the structure enable the Federal Reserve to accomplish its goals? Is there a better way to structure the system? If so, explain how.
Fed Open Market Operations
- 5-The Federal Reserve System is the central bank of the United States, which was founded in 1913 by the Congress. The main purpose of its foundation was to provide the nation with a more stable and flexible financial system. The Federal Reserved board is also known as the Board of Governors in which governors serve for a 14 years term. Its chairman and vice chairman serve for a 4 years term and may be reappointed subject to terms and conditions. The Federal Reserve System is composed by 12 Federal Banks and 24 branches which make up the Fed’s. These Reserve Banks serve other banks, the U.S Treasury, and indirectly the public. Federal Reserve banks are responsible to handle Treasury payments, sell Government securities and assists with the Treasury cash management and investment activities.
Each Reserve Bank’s board of directors supervises the management and activities of the District Bank. These directors contribute local business experience and community involvement
Week 2 Electronic Reserve Readings
- 6-To further reveal how the United States money supply has been gradually adjusted, a reaction function for the growth rate of non borrowed reserve is estimated, which has a closed relation to the empirical specification of the reaction function for the federal funds rates. A widely used technique for estimating an equation to determine the reaction function what is known as the generalized method of moments which is used to estimate the parameter vector.
- 7-There are two types of monetary policy, expansionary and contractionary. The main role of the expansionary policy is to increase the money supply in order to lower unemployment, it also has an important role in boosting the private sector with respect to borrowing and consumer expending which stimulates the economic growth. On the other hand, contractionary monetary policy contribute to slow the rate of growth in the money supply with the purpose to control inflation which sometimes leads to slow economic growth.
PLEASE ANSWER THIS PARAGRAPHS LIKE YOU WERE TALKING TO THE PERSON FACE TO FACE. PLEAS DO NOT USE THE SAME EXACT WORDS.
- 8-Your point about the decisions coming from the fed chair is a good one. What about the governors that comes from each regional federal reserve bank? Do their opinions have an influence on what the fed chair opts to do? If so, why are we seemingly less familiar with the governors than we are with the fed chair?