The FED
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- Have you ever heard of "the FED. the monetary policy, and the tools"? Well if you haven't, I'll explain it to you now so that you can know about it when you are older.
- The FED is short for "The Federal Reserve" and they are important to banks and money in the USA
- The purpose of the FED is to reduce inflation and simulate economic activity. Basically the FED is the USA's bank.
- They control the money supply, and they are the reason money never stops going around in the business cycle.
- The Monetary Policy is the actions that are taken by the FED to control the money. There is three tools that they use to help control how banks give out money and still get more money from it. Expansionary policy is how money grows and positive outcomes.
- There are three types of tools the FED uses. Reserve ratio is how much a bank has to hold when someone deposits money. Discount rate is how much the FED charges the bank when the bank borrows money. Open market operations is when the FED do the action of loaning money to or from banks when they need it
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