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What is the Federal Reserve? What are its economic goals? How does the Fed pursue its...

What is the Federal Reserve? What are its economic goals?

How does the Fed pursue its economic goals? How may the tools of monetary policy affect securities prices?

Do the fundamental economic goals of fiscal policy differ from those of monetary policy? If the Federal Reserve finances the federal government’s deficit, what will happen to the supply of money?

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Answer #1

1. Federal Reserve is the Central Bank of United states and the goal of Federal Reserve is monetary stability in the economy.

Federal reserve achieve economic goals by maintenance of a monetary policy and controlling various participants.

Tools of monetary policy will affect the securities price because they will be reduced or increased in order to control the money flow in the economy.

Yes, the fundamental economic role of fiscal and monetary policy differ from each other.

If Federal Reserve started to fund the deficits it will be leading to high level of money flow into the economy and it can even lead the economy on the brink of stagflation.

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