2. Briefly describe the evolution of the Federal Reserve System from its incepti
ID: 1156427 • Letter: 2
Question
2. Briefly describe the evolution of the Federal Reserve System from its inception to the current era. 3. Explain what we would expect to happen to the money supply if the Federal Reserve sells s5.5 million ds while banks increase their discount loans by $3 million. Be as specifi possible in your answer given the information provided. 4. Evaluate both of the following statements. a. "If banks increase their excess reserves, the monetary base will increase. If the monetary base inc money supply will increase. Therefore, an increase in excess reserves increases the money suppl b. The most important factor accounting for changes in the money supply in the long run is changeExplanation / Answer
2. Evolution of Federal Reserve System -
Federal Reserve system is central bank to United States of America.
Many factors like various financial crises held in USA before the inception of Federal resreve system becaus eof weak banking system of America and the financial panic of 1907 worked as final catlyst to led the foundation of central bank of America named as Federal Reserve. It was not structured to be privately owned and operated nor to have single headquarter. Federal Resrve borad was created though in washington and 12 others reserve banks located around the economoy. This board is liable to general public and constitite governors of the 12 banks as acting governors of the board
The structure that was set out in 1935 has not changed a bit. The federal nature of the system has endured a diversity of views now and promotes healthy debate over policies. Congress has assigned the task of stable prices and maximum employment to FOMC. In the moder federal reserve bank system, each reserve bank has independent resrech department with ots own publication.Over recent decades the Federal has augmented its public communication. Press conferences are held, Monetary policy resport also gets published etc.
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