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Prior To Beginning Work On This Discussion Forumreview Chapter 13 Ofma Prior to beginning work on this discussion forum Review Chapter 13 of Macroeconomics: Private and Public Choice. Review Monetary Policy: How Central Banks Regulate the Economy. Review Fed's 'Digital Dollar' Idea Has Frightening Implications For Privacy And Freedom. The United States’ monetary policy is largely determined by the Federal Reserve Bank (Fed). For this discussion, you will cordially debate the necessity of the Fed. For your initial post, address the following: How does the Fed control the money supply? Be sure to explain how they can expand or restrict the money supply. How does the banking system create money? List two or three pros and cons of the Federal Reserve Bank. What is your conclusion? Is the Fed necessary? Support your opinion. Your initial response should be a minimum of 200 words. Graduate school students learn to assess the perspectives of several scholars. Support your response with at least one scholarly and credible resource, in addition to the text. Use the APA: Citing Within Your Paper and the APA: Formatting Your References List resources from the UAGC Writing Center to appropriately cite and reference your sources.

Dr. Jack HW Helper · Accepted Answer

The Federal Reserve System, commonly known as the Fed, serves as the central banking authority of the United States. Its primary role involves controlling the money supply and implementing monetary policy to foster economic stability and growth. The Fed controls the money supply predominantly through open market operations, adjusting interest rates, and setting reserve requirements. Open market operations involve buying or selling government securities in the open market. When the Fed buys securities, it injects liquidity into the banking system, expanding the money supply. Conversely, selling securities withdraws money, constricting the supply. Adjusting the federal funds rate influences borrowing costs for commercial banks, which in turn affects overall lending and spending in the economy. Increasing the rate makes borrowing more expensive, restricting the money supply, whereas decreasing it has the opposite effect. Reserve requirements—the minimum amount of reserves banks must hold—also impact the capacity of banks to lend money; lowering requirements encourages lending, expanding the money supply, while raising them constrains lending. Banks create money through the fractional reserve banking system. When banks issue loans, they do not physically transfer existing deposits but create new deposits, effectively increasing the money supply. This process relies on banks maintaining a fraction of deposits as reserves and lending out the remainder to borrowers, who then deposit the loan funds into their own accounts, initiating further lending cycles. The Federal Reserve's influence has notable advantages and disadvantages. Among the pros, the Fed stabilizes the banking system, controls inflation, and promotes employment. Its monetary tools help smooth economic fluctuations and prevent severe downturns. However, cons include the risk of politicization, potential misjudgment of economic conditions, and the possibility of creating asset bubbles through excessive easing

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