U.S. Monetary Policy

Essay # 59279

Economics > Macro
Political Science > Fiscal Policy (economy)
Political Science > Government Agencies

This paper explores U.S. monetary policy, the Federal Reserve, and the different measures the government takes to stabilize the nation's markets.

1,305 words () | 4 sources | MLA | 2005 United States

Paper Summary:

This paper explains that the economy of the United States is based upon the idea of free marketplace and enterprise, but the economic structure includes a fair degree of governmental regulation. The author points out that this federal monetary policy is primarily the job the Federal Reserve, or the Fed; through the buying and selling of governmental securities, the Fed can control the nation's money supply and important related factors, such as interest rates. The paper states that, currently, because of positive economic indicators, the Fed has reverted to its 1999-2001 monetary policy of reducing slowly the amount of cash in the economy by selling securities with the goal of reducing accommodation, preventing inflation, and aiding stability.

From the Paper:

"More recently, economic analysts have noted continued expansion in economic activity in most sectors, and significant gains in employment. And, despite an increase in consumer price inflation resulting from the surge in energy prices, core consumer price inflation has remained stable. Along with the promising economic reports and indicators came future predictions of solid economic growth for the nation. With this information, the Fed continued its policy of slowly raising the fed rate (through controlling cash flow in the economy by buy and selling securities-in this case, by selling them). Of course, the Fed was careful to approach the interest rate elevation carefully."