Understanding Money & Banking.docx - Federal Reserve The...

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Federal ReserveThe Federal Reserve is the central bank of the United States whose job is to regulate theU.S economy and keep it growing in a stable manner, while also keeping inflation at acceptablelevels. It does so through the regulation of private banks through the manipulation of discountrates and reserve requirements. This in effect affects the amount of money being lent in theAmerican economy which contributes to the overall money supply as well as the demand formoney. In addition, the Fed is responsible for managing the check cashing system, as well asserving as a lender of last resort.The Fed consists of 3 key components: the Federal Board of Governors, 12 FederalReserve Banks and the Federal Open Market Committee. There are seven Board of Governors ofthe Federal Reserve System who are chosen by the president and the senate and serve a fourteenyear term. Their role is to conduct monetary policy through increasing or decreasing the money

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Term
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