FEDERAL RESERVE POLICIES TO IMPROVE STATE OF ECONOMY

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FEDERAL RESERVE POLICIES TO IMPROVE STATE OF ECONOMY The Federal Reserve or the Fed is the United States of America's central bank. This institution is charged with the responsibility of ensuring that the monetary state of the country is in order. Some of its function include the following; it is the lender of last resort for the banks in a country, the financial advisor to the government, discounting checks, the regulator of banks, distributes money in the economy, holding bank deposits and lending money to the government. With such a powerful reign over the economic and monetary institutions of a country, then the FED is by far an invaluable institution. During times of uncertainty in the economy, the FED takes measures to regulate and stabilize the systems to ensure that the economy is in a favorable state to allow for growth. Some of the economic conditions that may cause uncertainty are, when the prices are rising due to incredible rates of inflation, another indication of economic instability is the consistent decrease in consumer confidence. Consumer confidence is the trust the average income earner has on the existing state of the economy. When the consumer confidence deeps then their spending also decreases. This has a lot of serious ripple effects. For instance, the aggregate demand lowers since the market is not purchasing as much as before. The economic rate of investments also reduces as the stock prices go down. Businesses also suffer a loss of revenue due to decreased sales. When business revenues plummet then the business, in order to cut costs, has to lay some people of. Such actions by employers lead to a consequent rate increase in natural

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