Monetary Policy

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Catalina M


Date added:

December 12, 2014








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The Federal Reserve Act of 1913 gave the Federal Reserve responsibility for setting monetary policy. The Fed can not control inflation or influence output and employment directly; instead, it affects them indirectly, mainly by raising or lowering a short-term interest rate called the "federal funds" rate...
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The Federal Reserve has certain tools at its disposal to control monetary policy, open market operations, the discount rate, and reserve requirements. The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements, and the Federal Open Market Committee is responsible for open market operations...
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