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    The Fed - Powerpoint

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    The Federal Reserve System, also known as the Fed, is the central bank of the United States. It was created to regulate and continually improve the economy. The Fed fights unemployment and inflation through various monetary policy tools. It is organized with 7 members on the Board of Governors and 12 District Reserve Banks. The Federal Open Market Committee makes decisions about interest rates and the money supply. The Fed performs key functions such as controlling the money supply, supplying currency, clearing checks, supervising banks, acting as a lender of last resort, and serving as the banker for the U.S. government.

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    The Fed - Powerpoint

    Uploaded by

    api-261267976
    205 views16 pages
    The Federal Reserve System, also known as the Fed, is the central bank of the United States. It was created to regulate and continually improve the economy. The Fed fights unemployment and inflation through various monetary policy tools. It is organized with 7 members on the Board of Governors and 12 District Reserve Banks. The Federal Open Market Committee makes decisions about interest rates and the money supply. The Fed performs key functions such as controlling the money supply, supplying currency, clearing checks, supervising banks, acting as a lender of last resort, and serving as the banker for the U.S. government.

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    The Federal Reserve System, also known as the Fed, is the central bank of the United States. It was created to regulate and continually improve the economy. The Fed fights unemployment and inflation through various monetary policy tools. It is organized with 7 members on the Board of Governors and 12 District Reserve Banks. The Federal Open Market Committee makes decisions about interest rates and the money supply. The Fed performs key functions such as controlling the money supply, supplying currency, clearing checks, supervising banks, acting as a lender of last resort, and serving as the banker for the U.S. government.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    205 views16 pages

    The Fed - Powerpoint

    Uploaded by

    api-261267976
    The Federal Reserve System, also known as the Fed, is the central bank of the United States. It was created to regulate and continually improve the economy. The Fed fights unemployment and inflation through various monetary policy tools. It is organized with 7 members on the Board of Governors and 12 District Reserve Banks. The Federal Open Market Committee makes decisions about interest rates and the money supply. The Fed performs key functions such as controlling the money supply, supplying currency, clearing checks, supervising banks, acting as a lender of last resort, and serving as the banker for the U.S. government.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 16
    At a glance
    Powered by AI
    The key takeaways are that the Fed tries to regulate and continually improve the economy by fighting unemployment and inflation. It is an independent agency whose members are appointed and is currently chaired by Janet Yellen.

    The two main things that the Fed fights are unemployment and inflation.

    The Fed is organized with 7 members on the Board of Governors, 12 District Reserve Banks, and the Federal Open Market Committee which makes decisions about interest rates and money supply growth.

    Chapter 16

    The Federal Reserve


    System

    What is this Thing???


    Why

    do I have to learn about the Federal


    Reserve System AKA The Fed?
    It tries to regulate and continually

    improve the economy


    The Fed is an independent agency whose
    members are appointed
    The

    Chairman of the Federal Reserve is


    Janet Yellen.
    Previous 2 Chairs: Ben Bernanke and Alan

    Greenspan

    Fighting for the Right


    Reasons
    What

    are the TWO main things that


    the Fed fights?
    A. Unemployment
    B. Inflation

    How is the Fed


    Organized?
    The

    Federal Reserve System is organized


    with
    7 members on Board of Governors
    12 District Reserve

    Banks
    Federal

    Open Market
    Committee (FOMC)

    Makes decisions

    about interest rates


    and the growth of the
    U.S. money supply

    The 7 Functions of the


    Fed
    1. Control the money supply
    Using GDP, they try to maintain a

    stable money supply


    Ex. What would happen if $500 million dollars were to
    be added to the American economy? Would the value
    of the dollar change?
    YES- Inflation would occur

    2. Supply the economy with paper money


    Reminder:

    What is the official term for paper

    money?
    Federal Reserve Note

    The 7 Functions of the


    Fed
    3. Clears checks

    The 7 Functions of the


    Fed
    4. Holds bank reserves
    Each bank in the U.S. keeps a RESERVE

    ACCOUNT at the Federal Reserve bank in


    their region, which can be used for
    emergency borrowing.
    The Fed is sometimes called the Bankers
    Bank

    5. Supervises banks
    To insure that banks are a safe place

    for you to have your money.

    The 7 Functions of the


    Fed
    6. Lender of last resort
    A run occurs if something scares everyone

    into wanting their cash from the bank.


    What would happen if banks did not have enough?
    You would lose all of your money

    Has this ever happened before?


    Yes The Great Depression

    7. Banker of the U.S government


    Cashes checks for the U.S. government
    U.S. Treasury has a checking account with

    the Fed

    On a Side Note
    The

    Federal Deposit Insurance


    Corporation (FDIC) was created in
    1933
    Provides bank deposit insurance

    Guarantees the safety of deposits in


    member banks up to $250,000 per
    depositor per bank.

    How does that Work???


    How does the Fed accomplish these
    functions?
    1. Change the Reserve Requirement
    The amount banks are required to

    keep at the Fed


    More money in reserve = Shrink money
    supply
    Less money in reserve = Expand money
    supply

    How does that Work???


    2. Open market Operations
    Buying/Selling of government

    securities- (Treasury bonds, etc.)


    Issue more bonds = Shrink money
    supply
    Collect bonds = Expand money supply

    3. Change the discount rate


    The interest rate the Fed charges

    banks for loans

    What are the Results???


    Discount Rates
    are too High
    People get fewer
    loans
    Businesses stop
    expanding
    Unemployment
    increases
    Inflation decreases

    Discount Rates
    are too Low
    People get more loans
    Businesses expand
    Unemployment
    decreases
    Inflation increases

    Adjusting the Plan


    The

    Fed tries to keep the business


    cycle as stable as possible

    Adjusting the Plan


    If

    the economy is experiencing a


    contraction, the Fed will follow an easy
    money policy in order to increase
    the money supply.

    Vs.
    If

    the economy is experiencing a rapid


    expansion that may cause inflation, the
    Fed will introduce a tight money
    policy to reduce the money supply.

    Adjusting the Plan


    If

    a stabilization policy is not timed


    properly, it can make the business
    cycle worse.

    Heres the Plan


    Any

    policy made by the Federal


    Reserve to improve the economy is
    called monetary policy.
    Ex. Changing the money supply

    Any

    policy made by the U.S.


    government to improve the economy
    is called fiscal policy.
    Ex. Taxes, government regulation, etc.

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