Analyze the importance of the Fed for the United States economy. How important is the Fed to help stabilize the direction of the economy? Please cite any sources used. Also, I have seen an answer to this question but need a different answer.

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Kristelle BalandoLv10

29 Sep 2019

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The monetary system in any economy facilitates trade and allows people to trade more efficiently, as compared to a barter economy. In the United States, the monetary authority is the Federal Reserve System (also referred to as the Federal Reserve, or informally, as the "Fed" )

For this assignment, use the information presented in the textbook and the Fed website (http://www.federalreserve.gov/) when addressing the questions below.

1- What are the tools available to the FED for controlling the money supply? Which are used most often? Which are the most effective?

2- How does the money multiplier help to determine the effects of monetary policy?

3- What are the pros and cons of using monetary policy, as opposed to the use of fiscal policy, for implementing economic policies and practices?

carminecheetah752

An economy begins in long-run equilibrium, and then a change in government
regulations allows banks to start paying interest on checking accounts. Recall that the
money stock is the sum of currency and demand deposits, including checking accounts, so
this regulatory change makes holding money more attractive.
a. How does this change affect the demand for money?
b. What happens to the velocity of money?
c. If the Fed keeps the money supply constant, what will happen to output and prices in the
short run and in the long run?
d. If the goal of the Fed is to stabilize the price level, should the Fed keep the money supply
constant in response to this regulatory change? If not, what should it do? Why?
e. If the goal of the Fed is to stabilize output, how would your answer to part (d) change?

greeneel565

1- an economy begins in long-run equilibrium, and then a change in goverment regulations allows banjs to start paying interest on checking accounts. recall that the money stock is the sum of currency and demand deposits, including checking accounts, so this regulatory change makes holding money more attractive.

a-How does this change affect the demand for money?

b-What happens to the velocity of money?

c-If the Fed keeps the money supply constant, what will happend to the output and prices in the short run and in the long run?

d-If the goal of the Fed is to stabilize the price level, should the Fed keep the money supply constant in response to this regulatory change?if not, what should it do? Why?

e-If the goal of the Fed is to stabilize output, how would your answer to part(d) change?

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Analyze the importance of the Fed for the United States economy. How important is the Fed to help stabilize the direction of the economy? Please cite any sources used. Also, I have seen an answer to this question but need a different answer.

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Principles of Economics

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