Discuss the major participants in the U.S monetary system and the importance and function of money.

Expert Solution

Major participants in the United States monetary system are Central banks along with the commercial banks and Government sponsored enterprises and other mutual funds.

The monetary system will be governed by the central banks of the United States which is the Federal Reserve and they will be formulating the monetary policy in order to control the money flow in the monetary system and Central Bank will be reviewing it at particular interval in order to find out the optimum money supply whereas commercial banks will be required to follow up with the rules and regulation which are laid down by the central banks and they will be trying to establish the adequate monetary flow by adhering to the guidelines which has been set by the central bank so they will be lending in accordance with the central bank interest rates and they will be trying to maintain an appropriate balance in the economy.

Importance of money is that this can be used for multiple purposes in the economy and it can be used for generation of the credit and liquidity and propelling of the growth and prosperity.

Functions of money will be including that it is a medium of exchange along with it is a store of value and unit of measurement.

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