The Federal Reserve System

Paper Summary:

This paper explains that the Federal Reserve System, which is the fundamental banking system of the United States, serves as the primary controlling economic factor. This system can control the money supply, which has a significant influence on everyday business practices. The author points out that, although the various components of the Federal Reserve are complex, minor changes within each component can greatly manipulate the economy. The paper explains several macroeconomic terms and how the money supply can be increased.

From the Paper:

"Research has indicated that an inverse relationship is evident between the gross domestic product and the unemployment rate. An increased gross domestic product typically results in increased spending, which creates additional jobs (McConnell & Brue, 2004). Therefore, the unemployment rate decreases. During this particular time, additional money is present in the system.
"It is apparent that the money supply is influenced by a variety of factors; however, the money supply can also influence specific factors."

Sample of Sources Used:

• Carpenter, S. and Demiralp, S. (2006). The liquidity effect in the Federal Funds Market: evidence from daily open market operations. Journal of Money, Credit, and Banking, 38 (4), 901-920. Retrieved May 4, 2007, from EBSCOhost database.
• McConnell, C. and Brue, S. (2004). Economics: Principles, policies, and problems. New York: The McGraw-Hill Companies.
• Saltzman, C. (2004). Stagflation: that ugly word again? Journal of Financial Service Professionals, 58 (6), 21-24. Retrieved May 6, 2007, from EBSCOhost database.
• Senda, T. (2001). Asymmetric effects of money supply shocks and trend inflation. Journal of Money, Credit, and Banking, 33 (1), 65-89. Retrieved May 5, 2007, from EBSCOhost database.
• Sniderman, M. (2006). The economy in perspective. Economic Trends, 1. Retrieved May 2, 2007, from EBSCOhost database.

More papers on The Federal Reserve System:

• Analytical Essay # 133152 : "The History of the Federal Reserve System"
• Term Paper # 148780 : "The Federal Reserve System: An Overview"
• Research Paper # 103753 : "The History of the Federal Reserve System"

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