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The Federal Reserve System

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michelle ashmore

on 7 March 2018

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Transcript of The Federal Reserve System

Monetary Policy
the Federal Reserve's actions, as central bank, to achieve 3 goals specified by Congress: maximize employment, stable prices, and moderate long-term interest rates in the US
the History of the Fed...
Structure of the Federal Reserve
Money and The Federal Reserve System
go to --- youtube.com/watch?v=8Hq5zw4YaZQ
1907 - financial panic caused the President and Congress to design the idea of a Central Bank
1913 - The Federal Reserve is created as the nation's 1st Central Bank
acts independently from US govt
provides gov't oversight
The Aldrich Plan
the Federal Reserve is commonly known as the FED
Member Banks

ex: Wells Fargo, CB&T, Charter, Bank of America
District banks
12 districts
Board of Governors
Federal Open Market Committee (FOMC)
makes decisions about the money supply and interest rates
Chairman of the Federal Reserve:
Jerome Powell
Which component of the Federal Reserve system holds the most power in regards to day to day monetary policy?
A) The Federal Open Market Committee
B) The Board of governors
C) Congress and the President
D) The 12 District banks

runs the Fed
What is the role of the Federal Open Market Committee?

a. it collects info. about each Federal Reserve District and reports on the economic conditions to the Board.

b. it is composed of 7 members appointed by the President, it oversees the Federal Reserve system.

c. it redraws the map of the Federal Reserve districts every 10 years to respond to economic changes

d. it makes key decisions about interest rates and the US money supply

in the US we use: "fiat money" / legal tender
-- issued by the govt
for money to have value, the people have to believe it has value and it must serve these functions:
Medium of Exchange
money facilitates transactions between indiv, businesses, and govt
Store of Value
money keeps its value when you save it and not spend it.
unit of account / standard of value
the expressed value of money. a guide for how much an item costs or how much we have to spend.
The Fed explained
private part of the Federal Reserve system
have private board representing banking, business, and community organizations throughout the district
nominated by President, confirmed by Senate
7 members of the Board of Gov & 12 district bank Presidents
(only 5 get a vote at any time... NY always votes)
Full transcript