Question

1. What are the stated objectives of the Federal Reserve System?

2. What means does it have in controlling monetary policy, i.e. rates, reserve requirements, etc.

3. What metrics would you use to determine the success, or failure of our central bank?

Answer 1

1. Federal Reserve System aims to promote the US economy in an effective manner.

It aims to produce maximum employment in the country so that less people are jobless.

It aims that prices of products in the market are stable.

It tries to keep moderate long term interest rates.

2. Federal Reserve System supervises and regulates banks and other financial institutions for the safety of banking and financial system.

It protects the credit rights of the consumers.

3. Following metrics are used to determine the success or failure of central bank:-

Growth Rate

Lending Rate

Inflation rate

Interest Rate