The Federal Reserve

is the main monetary institution in the United States .As such(prenominal) it has the enormous task of ensuring that the money supply in the rake is at a steady rate and it does this by implementing received fiscal policies and obligateling enkindle rates This parley hence diverge seek to discuss the effects of interest rate hikes and inflation on the economy and how these factors affect the economy and the policy verbalism and implementation of the Federal take . This will also accommodate a brief discussion of the 3 main vent of lights of monetary policy that the Federal Reserve uses to action its objectivesMonetary indemnity ToolsThe main monetary policy cocks of the Federal Reserve lie of open market operations , reserve requirements and cut window lending Open market operations is the or so important ute nsil because it allows the Federal Reserve to directly encounter the money supply .

The buying and selling of government securities and bonds increases or decreases the funds that are available in the market , thence , directly affecting the interest ratesReserve requirements are another effective musical instrument because regulate the amount of money that banks are command to keep on hand . The more money that is required to be reserved the less capital is available in the market . This leads to higher interest rates but at the same time serves to counteract the effects of inflationThe last tool that the Federal Reserve uses is the discount window lending tool which determines the rate by which banks...If you want to ge! t a dissipated essay, order it on our website: OrderEssay.net

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