Monetary Policy : What The Federal Reserve Is The Nation 's Central Bank?

931 Words Apr 12th, 2016 4 Pages
Monetary policy - refers to what the Federal Reserve, the nation 's central bank, does to influence the amount of money and credit in the U.S. or other countries economy. The main idea behind monetary policy is that the quantity of money, or the money supply, is the major contributing factors of price levels. Economist believe that price stability allows private businesses to plan their growth, invest in their businesses and keep the economy growing at a steady pace without an over- or undersupply of goods and services. These tandem goals of monetary policy are often referred to as flexible inflation targeting. The main driver of all monetary policy decisions is the Federal Reserve Board. This consists of seven members who are appointed by the President of the United States to serve a fourteen years terms as members. This broad governs the regional Feb Banks and the system of hundreds of state and national banks in the country.
Money supply is the total stock of a country currency and other liquid instruments in a country 's economy as a particular time. The money supply can include cash, coins and balances held in checking and savings accounts. Economists analyze the money supply and develop policies revolving around it through controlling interest rates and increasing or decreasing the amount of money flowing in the economy. Money supply data is collected, recorded and published periodically, typically by the country 's government or central bank. Public and private…

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