Economics is the study of how an economy uses its scarce resources. Aside form using limited resources to grow the economy, money is needed to produce wealth and production. The Federal Reserve System is a government body that serves as the nation’s central bank. The Federal Reserve System was enacted by Congress and the system consists of seven member Boards of Governors which is headquartered in Washington, D.C., and twelve Reserve banks located in major cities in the United States.
The Purpose and Function of Money
Money is anything that is accepted as payment for goods and services and used as repayment for debts. Money is defined @www.privateer.com as being a “medium of exchange, and without money, the production and exchange of anything but the most rudimentary goods and services is impossible. It is not difficult or time consuming, or inefficient, it is IMPOSSIBLE”! “Money ensures the success of exchange by being the one item on offer that is ALWAYS acceptable”. Money is used as an intermediary for trade. Money is a good that is most tradable, and the highest in demand.
How the Central Bank Manages a Nation’s Monetary System
What is the Central Bank? The Central Bank AKA “The Fed” is a government bank that is responsible for overseeing the monetary policy for a nation. Some of the responsibilities of the Central Bank include issuing currency, regulating the credit system, overseeing commercial banks, and managing exchange reserves. From the internet, investopedia.com states, “The central bank has been described as "the lender of last resort"; which means that it is responsible for providing its economy with funds when commercial banks cannot cover a supply shortage. In other words, the central bank prevents the country's banking system from failing”. The primary purpose of the Central Bank is to ensure stability of the nation’s money. The Central Bank implements a nation’s monetary policy by buying and selling U.S. Treasury Bonds, and steer...