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Monetary Policy

In reference to "monetary policy,"
1. Please describe the monetary system of the United States including how it is flexible in relation to economic conditions, and how the US Federal Reserve System changes the supply of money.
2. How does the supply of money impact the economy?

These are topics that are touched on in my two textbooks, but the text material on monetary policy is not easily identified under any particular heading in either of the texts. (One of my textbooks is required for my macroeconomics class, and the other was one that I picked up on for additional information).

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In reference to "monetary policy,"
1. Please describe the monetary system of the United States including how it is flexible in relation to economic conditions, and how the US Federal Reserve System changes the supply of money.

By definition, Money is Medium of exchange (liquidity property), Store of value, and Unit of Account
M1 (Narrow Money) = currency held outside of banks + demand deposits
M2 (Broad Money) = M1 + notice deposits (+ saving deposits)

Money is printed and controlled by the central bank of a country.
Federal Reserve System is the central banking system of the United States.
The Federal Reserve includes:
- The Board of Governors of the Federal Reserve System is the national supervisory agency
- 12 regional Federal Reserve banks (Each reserve bank is the central bank for its district.)
- Member banks = ...

Solution Summary

Please describe the monetary system of the United States including how it is flexible in relation to economic conditions, and how the US Federal Reserve System changes the supply of money.

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