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In: Economics

What effect did the Federal Reserve Act and the Humphrey-Hawkins Full Employment and Balanced Growth Act,...

What effect did the Federal Reserve Act and the Humphrey-Hawkins Full Employment and Balanced Growth Act, have on business practices and on the general business climate? What do you think resulted from one or both of these acts?

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Expert Solution

  • Federal Reserve act was put forward by the 63rd US Congress in order to provide flexible,safe and more stable monetary and financial system.
    • There was both domestic and international impact for the economic system of US.The absence of a central banking system in US before this act created a financial situation, which is characterized by immobile reserves and inelastic currency.This act helped them to control inflation,even though such decisions may lead to controversy .
  • Humphrey-Hawkins Full Employment and Balanced Growth Act:This act is based on legislation by US government.This act provides temporary government jobs in order to reduce unemployment.This was also helpful in formulating sound monetary policy,reducing inflation ,increasing the employment opportunities by managing the amount and liquidity of currency.
    • Impact on unemployment rate:There was no much impact on this area.
    • Impact on price stability:Even there is no impact in price stability too.Actually this act has not given any affect in both of these areas.

Rahul Sunny answered 1 year ago
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