Discussion Response

Peer Response

The Federal Reserve was established in 1913 to restore public confidence in the U.S monetary

system. The Federal Reserve Act was created to stabilize the monetary system. The Federal

Reserve has three primary responsibility; monetary policy, banking supervision and financial

services. ‘’The goal of a monetary policy is to help the economy achieve price stability, full

employment and economic growth 9McConnell, C., Flynn, S., & Brue, S. 2015).’’ One indicator

that can help determine if the feds balanced monetary fund’s correctly would be the

unemployment rate.

To balance out the market and stabilize prices the Feds buy and sell bonds to either increase or

decrease the money supply. Market activity is difficult to predict, however before the financial

crisis of 2007-2008 the Federal Reserve was manipulating interest rates which contributed to the

crisis. Currently new laws and policies are in place in order to decrease the chances of another

financial crisis.

References:

McConnell, C., Flynn, S., & Brue, S. (2015). Macroeconomics. (20th ed.). New York, NY:

McGraw-Hill. ISBN: 9780077660772