The Federal Reserve - The Federal Reserve System #...

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The Federal Reserve System ################## Macroeconomics: Econ 1160 Professor ################# June ############### The Federal Reserve System
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The Federal Reserve plays many important roles in today’s economy . Without the Federal Reserve there would be incompetence in the decision making for monetary policy . The main job of the Federal Reserve is to aid the President in any decision making process about monetary policy . The Federal Reserve is also responsible for assuring the smooth functioning and continued development of our nation’s vast payment system . The Federal Reserve was established by congress in 1913, it was designed to help the country with a more stable and secure economic structure (Meltzer) . The Federal Reserve has many responsibilities including being in charge of the nation’s monetary policy and overseeing the regulation and management of banking institutions (eSSORTMENT) . The Federal Reserve also protects consumers’ credit rights, maintaining the financial system, and providing various economic services to the government and its citizens . The Federal Reserve has to regulate the money supply, prices and try to keep employment stable . The Federal Reserve is able to do these things because it helps prevent uncontrollable inflation and unemployment . The Federal Reserve helps fix this by meeting the reserve requirement, which is the percentage of money that banks are not allowed to loan out . Depending on if the reserve requirement is raised or lowered money is either put into circulation or money is collected through loans . If it were not for the Federal Reserve the President would have to make all decisions regarding our monetary policy, even though the Federal Reserve makes the decisions the President still has the power to change them .
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One of the major parts of the Federal Reserve System is the Board of Governors which is comprised of seven members who are nominated by the President and confirmed by the Senate . The term that each of these members serves is two years and a full term is fourteen years . The Chairman and Vice Chairman of the Board are picked by the President from the members that the Senate approved . The Board of Governors oversees the Federal Reserve System . The main responsibility of the Board members is the formulation of monetary policy . The seven Board members of the Board of Governors are also the majority of the Federal Open Market Committee (FOMC) . The other five members that make up the FMOC are Reserve Bank presidents . Within these two organizations our nation’s monetary policy is conducted
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The Federal Reserve - The Federal Reserve System #...

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