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Monetary and fiscal policy macroeconomics
Monetary and fiscal policy macroeconomics
Monetary and fiscal policy
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Monetary Policy: The Fed's Economic Oversight Modern Monetary policy is defined as “[t]he actions of a central bank, currency board, or other regulatory committee that determines the size and rate of growth of the money supply in a country, which in turn affects interest rates. Monetary policy is maintained through actions such as increasing the interest rate, or changing the amount of money that banks are required to keep in the vault also known as bank reserves” (Investopedia). Meanwhile, fiscal policy is determined by government actions, and how money is spent and collected, not by a central bank. Modern Monetary Policy’s interactions between the central bank, the treasury, and the financial system have been coinciding with one another but still need further reform to make policy more effective given the current changes in the economy. Two key objectives to maximize employment and stabilize prices were established by Congress in the Federal Reserve Act in regards to the monetary policy. These objectives, known as the Federal Reserve’s dual mandate are a long-term goal for monetary policy. In order to reach this monetary policy goal, the Federal Reserve was established as an independent agency by Congress to ensure that decisions are focused solely on achieving the dual mandate and are free from political influence. “The Federal Reserve's dual mandate and the provisions for the independence of the Federal Reserve are two key factors that help guard against negative outcomes in the United States” (FRB). Currently, the Federal Reserve, which is lead by Chairman Ben Bernanke, is in charge of the monetary policy in the United States. The FED is not only in charge of monitoring interest rates for the country, but also has maintai... ... middle of paper ... ...com/la-county-nonpartisan-in-los-angeles/american-monetary-institute-ami-history-of-money-monetary-reform-public-action-3-of-6> Morris, David P. "What Fed's 'Operation Twist' means for you." USA TODAY. N.p., 22 Sept. 2011. Web. 12 Dec. 2011. Consumer/50511514/1>. Mallin, Jay. "Federal Reserve (The Fed) - The New York Times." Times Topics - The New York Times. 14 Dec. 2011. Web. 14 Dec. 2011. . “Modern Monetary Policy.” Investopedia. 2011. Web. 12 Dec. 2011. "Presenting the American Monetary Act." 18 July 2010. Web. 10 Dec. 2011. .