Chapter31 Additional Insights

Chapter31 Additional Insights - Chapter 31: Monetary Policy...

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Chapter 31: Monetary Policy {Note: In this chapter, please read the main chapter material. You may skip Appendix A.} The Federal Reserve Bank of the U.S., commonly known as the “Fed”, is the organization responsible for conducting monetary policy. Congress created the Fed in 1913 under the Federal Reserve Act. Historically, the banking industry in the U.S. was extremely chaotic until the middle of the 19 th century. Around 1860, Congress started to implement various laws and regulations to bring order out of chaos. As a result, the banking industry is one of the most regulated industries in the U.S. economy. The Fed is an extremely important and powerful organization in the U.S. economy as well as in the global economy. Not surprisingly, Congress sets the salaries of the Board members. For 2005, the Chairman's annual salary is $180,100. The annual salary of the other Board members (including the Vice Chairman) is $162,100. That is not a lot of money for all of the responsibility that comes with the job! You hear a lot about the Fed in the news, mostly with regard to “setting interest rates”.
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Chapter31 Additional Insights - Chapter 31: Monetary Policy...

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