Please use the internet sources or the additional sources listed in your materia
ID: 2439333 • Letter: P
Question
Please use the internet sources or the additional sources listed in your materials or any other internet sources ( sources must be documented in MLA format) respond to the following question: (Minimum 250 words)
Investigate current Federal Reserve Monetary Policy. Write a brief report outlining this policy in the past twelve months, and how it relates to the economy, and your personal finances. For example, will the current policy make you more or less likely to take out a major loan, (car or house purchase), in the next year? Your report should include any changes in the three mechanisms the Federal Reserve uses to control the supply of money in the economy.
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Explanation / Answer
Answer-The Federal Reserve monetary policy is basically the influential efforts by the central bank and the Federal Reserve to influence the economy’s amount of money and the credit in U.S. The performance and behavior of credits and money have consequential implications to the performance of the U.S economy. Therefore, there is a great need to control the economy to avoid the effects of inflation. If money in an economy is not well controlled, it will lead to inflation, which is basically the rapid sky rocketing of the amount of money in an economy, leading to reduction in the purchasing power of money.
In the previous year, the U.S has experienced an increase in economy, according to Chair Janet L. Yellen’s Semiannual Monetary Policy Report to the Congress. The report provides that the GDP increased by 3-3/4 percent annual rate, in the second half of the previous year. Also, the unemployment rate has reduced considerably, from 6 percent last year to a stable 5.7 percent. It therefore demonstrates that efforts have been put in place by the Federal Reserve monetary policy to control the economy, in many different ways.
Personally as a citizen, through the policy, I experience stable prices, which not only helps me to spend my income properly, but also making it easy to predict the market prices for commodities in my business. Three years ago I experienced great losses in my business of electronic trade. Due to great inflation, the importation of laptops had gone down, which directly affected my stock. Through this, the effects of inflation affected me directly as a citizen. With the efforts of the Federal Reserve monetary policy, these effects are reduced considerably.