Can someone please help me understand the fed. I don't understand how it works. Here are some questions. Please answer them!!!

1. What is the Federal Reserve System
2. What were circumstances that led to the Federal Reserve Act?
3. Who wrote the Federal Reserve Act?
4. Was the Federal Reserve one of the causes of the Great Depression? Why or why not?
5. What “flaws” were identified in the Federal Reserve System that were addressed after the Great Depression?
6. Explain how the Federal Reserve regulates the money supply?
7. How does this influence economic activity?
8. What happens when inflation is high?
9. What is the “reserve requirement”?
10. What is the discount rate?
11. What is the federal funds rate?
12. What are the economic indicators examined by the fed?

If someone could answer a couple of these questions for me I would greatly appreciate it.

The Federal Reserve System (the Fed) is the central banking system of the United States. Created in 1913 by the enactment of the Federal Reserve Act. It is a quasi-public (part private, part government) banking system.


The main purpose of The Federal Reserve System is to regulate the supply of money and credit to the economy. First and most important, Fed purchases and sales of government securities to regulate money and credit are referred to as open-market operations.

A second monetary policy tool available to the Federal Reserve is the discount rate, the interest rate the Fed charges on loans it makes to banks. By increasing or decreasing this rate, the Fed can discourage or encourage banks to borrow the funds it creates and, therefore, make more loans to the public.

A third way in which the Fed operates monetary policy is by regulating the proportion of liquid reserves that banks must keep on hand. Obviously, the higher the reserve requirement, the less funds there are available to make new loans.


The discount rate is a financial concept based on the future cash flow in lieu of the present value of the cash flow. Actually the interest rate is the Fed charges on loans that it makes to banks.


The federal funds rate is the interest rate at which private depository institutions (mainly banks) lend balances (federal funds) at the Federal Reserve to other depository institutions, usually overnight.

You can use wikipedia to answer those questions!!!

Reminds me of someone who's trying to get people to write his research paper for him... The Federal Reserve is one of the most contentious institutions in the world and they, along with a select few private banks in Europe and elsewhere control the economic destiny of nearly the entire planet, and they answer to no one. But you can research the rest. We're not here to do your homework assignment for you.

maybe wikipedia is banned/deemed inappropriate/inaccessible in china (where bvic1991 happens to state where he is in his profile)? just a thought.


true. i agree with watermonkey. those questions look like something to be assigned to a student, and which is more likely than not, answers of which can be found in class textbooks.

if not, then perhaps their main website can help bvic1991 with his research (hopefully it's accessible to him).
http://www.federalreserve.gov/

I would never argue with someone who's agreeing with me, such a rarity these days around here.

I was just thinking, hoping really, maybe he's a Chinese terrorist type who's seeking to dismantle the Fed in hopes of bringing down the entire western world... *crosses fingers*