Essay on Monetary Policy And Political Influence On The United States

1143 Words Dec 8th, 2016 5 Pages
Monetary policy describes the way that central banks work to reach desired macroeconomic policy goals including overall price stability, total employment, and consistent economic growth. The Federal Reserve of the United States has certain macroeconomic goals set by Congress such as reaching full employment and ultimate price stability (Economic Outlook, 40-41). In combination with these particular objectives, the United States Congress decided that the functional behavior of monetary policy should be independent of political influence. In turn, the Federal Reserve is an agency that functions independently and free from control by the federal government. The only times in which these lines between monetary policy and politics begin to blur together have been in times of great economic hardship, but not under regular circumstances. An investigation of the relationship of monetary policy with political influences in the United States will help identify how it can operate independently as well as in the political sphere. Fiscal policy is used to describe the spending behavior of the United States federal government. Fiscal policy judgments are determined by the Federal Reserve Bank and by Congress and have absolutely no bearing on deciphering fiscal policy. The Federal Reserve implements a diverse array of policy tools to further develop its legal objectives of full employment and overall price stability. An important policy tool that is used is the target of the federal…

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