FEDERAL RESERVE

Federal Reserve VI Q12

Federal Reserve

(a) Does the Federal Reserve have complete control over the money supply at all times? Why or why not?

Ans. We all are aware that the primary job of the Federal Reserve is to manage the money supply it still wouldn't have complete control over inflationary pressures The Fed's original job was to organize, standardize and stabilize the monetary system in the United States. It had to set up a method that could create "liquidity" in the money supply -- in other words, make sure banks could honor withdrawals for customers. It also needed to come up ...