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ECO 212 Week 5 IA Federal Reserve Paper

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Running Head: FEDERAL RESERVE
Federal Reserve
Name
University of Phoenix
Federal Reserve
Introduction
The monetary policies and monetary system of all organizations of the United States are
strongly governed by their Federal Reserve. With that, this paper will cover all aspects of the
monetary system in the country, and how they are being managed by the Federal Reserve.
Moreover, this paper will also explore the many roles of money in a certain state. It would also
be the interest of this paper to find the kind of direction that the Federal Reserve of the United
States of America give the entire country’s economy. These monetary policies have a direct
impact on the production and employment rate of a country, which will also be covered in this
paper.
Function and Purpose of Money
Humans have been using money for almost all their lives. It this highly commercialized
world, it is almost impossible to survive without money. However, there was still a point in
history when people lived without money, and that period was sporadic simply because people
Federal Reserve 1

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did not have a fixed material to exchange for the commodities they need. Barter was still the
major mode of acquiring commodities during that time when money was not yet invented.
Throughout the years, as things started to be more modernized, money became the major
medium for trading and commodity exchange (federalreserve.gov, 2010). Truly, money has made
various transactions more efficient for the people. Aside from that, money have evolved to be the
main component in regulating inflation or deflation.
Management of the Monetary System
As previously mentioned, it is the Federal Reserve of the United States of America that is
responsible for the monetary system of the country. However, the one that is really focused on
the actual managing and networking task is the Central Bank. In instances of deflation, the
Central Bank would then reduce the interest rates so that the supply of money in country would
increase. On the contrary, if there is an anticipated inflation, the Central Bank also has the
control to increase the interest rate as their wait of preventing it from further compromising the
economic status. These two activities are mainly the activities of the Central Bank, and their
basic method of regulating and managing the monetary system of the country.
Recent Monetary Policy
Monetary policy are made by the government and are basically done to save the United
States of America from any form of financial instability. This is what the current monetary policy
is all about as well. The Federal Researve creates a direction that will prevent USA from
encountering another round of financial crisis as what occured in the past. In fact this sitation
still has its negative remnants in the country until now, thus the Federal Reserve should really try
to avoid such circumstance from happening again.
Policy Actions Confirming the Direction
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Running Head: FEDERAL RESERVE Federal Reserve Name University of Phoenix Federal Reserve Introduction The monetary policies and monetary system of all organizations of the United States are strongly governed by their Federal Reserve. With that, this paper will cover all aspects of the monetary system in the country, and how they are being managed by the Federal Reserve. Moreover, this paper will also explore the many roles of money in a certain state. It would also be the interest of this paper to find the kind of direction that the Federal Reserve of the United States of America give the entire country's economy. These monetary policies have a direct impact on the production and employment rate of a country, which will also be covered in this paper. Function and Purpose of Money Humans have been using money for almost all their lives. It this highly commercialized world, it is almost impossible to survive without money. However, there was still a point in history when people lived without money, and that period was sporadic simply because people did not have a fixed material to exchange for the commodities they need. Barter was still the major mode of acquiring commodities ...
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