The Federal Reserve Bank and Monetary Values - 1295 Words

Monetary values have changed throughout history because problems presented in each system of commerce. Bartering was among the earliest forms of commerce to present a problem. It did not establish monetary value in anything specific, allowing an individual’s wants or needs to be deemed monetary values. Each seller could make exchange requests based on different things. For example, a starving man could deem grain a commodity if he only manufactures luxury goods. Based on his hunger, the starving man can request to make an exchange of his luxury good with farmers for grain. Given that luxury goods are not a necessity, nor desired by everyone, the farmers can refuse his offer. The man would have to barter with a third party to acquire whatever the farmers were willing to make an exchange for. Inconsistent commodities in bartering made transactions inefficient because it could require multiple exchanges. Standards were established to combat the inefficiency of bartering through e stablishing value in one set commodity that all would accept. With a standard, the man could obtain grain directly from the farmers because it is mandated that the standard be accepted as debt payment. Therefore, it is more efficient to have a standard which only requires one transaction than to barter. For a matter of convenience, value transferred from virtually any object to specific resources. A common resource used for standards is metal. In early empires and recent nations, gold and/or silverShow MoreRelatedFiscal Policy, Monetary Policy, and a Healthy Gross Domestic Product1716 Words   |  7 PagesEconomic Health/Fiscal Policies and Federal Reserve/Monetary Policies Paper Understanding Gross Domestic product is central for understanding the business cycle and the progression of long-run economic growth (Hubbard O’Brien, 2011, p. 631). The GDP is defined as the value-added of all goods and services produced in a given period of time within the United States (2008). The GDP is widely used as an gauge economic wellness and health of the country. What the GDP represents has a hefty impactRead MoreThe US Federal Reserves Monetary Policy916 Words   |  4 PagesU.S. Federal Reserves Monetary Policy The nations monetary policy is set up by the Federal Reserve in order to support the aims and objectives of better employment, stable prices and a suitable and logical long term interest rates. One of the main challenges that are faced by policy makers is the stress among the aims and objectives that can occur in the short term and the fact that information regarding the economy becomes delayed and can be inaccurate (Monetary). The Federal Reserve Act laysRead MoreThe Federal Reserve And Its Monetary Policy1461 Words   |  6 PagesThe Federal Reserve and its Monetary Policy The Fed, or The Federal Reserve is the Central banking system of the United States of America. This politically isolated central banking system of the United States Is to the rest of the world’s central banking systems, what the influence of the writings of John Locke, and the Magna Carta are to creation of the United States and its Declaration of Independence. Apart from a few minor/major economic crisis since its conception, The Federal Reserve systemRead MoreThe Workings And Structure Of The Federal Reserve Banks Of Usa1507 Words   |  7 Pagesfurthermore consists of the Federal Reserve System, foreign banks, commercial banks, offshore banks, credit unions and saving institutions. Financial markets consist of debt and money markets, equities markets and futures and options markets. 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Monetary policy consistsRead MoreComparison of Us and Uk Banking Systems825 Words   |  4 PagesThe Bank of England has had much success and as a result many nations have followed its lead in creating a central banking systems of their own. The United States is one of these nations. The two nations have many similar banking objective and strategies on how to best achieve the objectives. These nations also differ greatly in some aspects of their banking philosophies. The currencies of both nations are strongly held around the world. Their monetary policies and bank regulations differ in someRead MoreMonetary Policy Essay1440 Words   |  6 Pagesused by the Federal Reserve to control the monetary policy. 1. Spread between the Discount Rate and the Federal Funds Rate 2. Required Reserve Ratio 3. Open Market Operations These economic tools influence the money supply in the following ways: 1. Difference in Discount Rate and Federal Funds Rate: Banks are able to borrow from the Fed if the discount rate charged by the Fed is lower than the federal funds rate charged by other banks. As the discount rate is decreased, banks shift theirRead MoreRole Of The Federal Reserve1210 Words   |  5 PagesRole of Federal Reserve We will begin with real GDP. Real GDP, an acronym for Gross Domestic Product, is the total value of final goods and services during a particular period or year adjusted for price changes. The GDP is an indicator of a country’s economic health. Final goods and services definition is a goods consumed rather than used for further processing. The Real GDP is increased or decreased based Inflation or deflation. Inflation is an increase in the average overall price for goodsRead MoreHow Does The Central Bank Manage The Nation s Monetary System?845 Words   |  4 Pagesâ€Å"Money is a means of payment, store value, and a unit of account† (Case, Fair, Oster 2011). Money is our economy’s barter. Instead of providing goods and services to get other good and services, money is that form of exchange. For example, you can easily go to the store with money and buy a gallon of milk. Money is a store of value; for instance gold and silver. Money gives purchasing power from one period to another, in other words it can be (look for â€Å"USED†)r ver time. As mention in the classRead MoreMonetary Policy Essay1688 Words   |  7 PagesMonetary Policy in the United States Abstract The role of government in the American economy goes past just being a regulator for specific industries. There are two main tools for achieving these objectives: fiscal policy and monetary policy. The Federal Reserve sets the nations monetary policy to promote the objectives of maximum employment, stable prices, and moderate long-term interest rates. Monetary Policy in the United States Monetary policy is the government or central