1.) What is (define) The Fed? When was The Fed created? What does The Fed. Consist...

1.) What is (define) The Fed? When was The Fed created? What does The Fed. Consist of? What are the services that The Fed. provides for the Macro-economy?

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Expert Solution

Fed or Federal Reserve is the central banking system that plans and implements monetary policy of different nature along with other functions to give a growth and stability to the economy.

Fed was created with the help of Federal Reserve Act on 23 December of 1913.

Fed consists of 12 Federal Reserve banks , present in 12 Federal Reserve districts in the USA and it is controlled by the Federal Reserve board of governors. The governors are selected from the acting governors of the 12 Federal Reserve banks and out of that, 7 governors form the board. Each governor has the tenure of 14 years.

Fed provides following services for the macro-economy.

A. To plan & implement monetary policy to give growth & price stability to the economy

B. Regulate inflation rates to prevent rise in prices

C. Maintain the confidence of the investors & consumers to the banking system

D. To act as a banker of the last resort to help out other banks when their are in trouble.

Rahul Sunny answered 11 months ago

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