chapter 22

Question 1

what is the federal reserve

Answer 1

it’s the central bank of the United States like the country’s financial manager.

Question 2

what is the purpose of the federal reserve

Answer 2

to promote maximum employment, while keeping inflation low and stable but the problem is that the Fed can’t directly change inflation or employment.

Question 3

what does The Fed use the monetary policy for

Answer 3

to nudge people and businesses to spend more or less today, which in turn affects output, and therefore both employment and inflation.