USA economy Essay Example | Topics and Well Written Essays - 1000 words

USA preservation - Essay Exampleof the most important responsibilities of the Fed is to ensure monetary perceptual constancy in the economy, which wad be achieved through a combination of stable prices of goods and services across the economy coupled with a low inflation level and level of confidence of the investors in the currency of the country. The Fed comes out with monetary policy in order to ensure a certain key objectives like delivering price stability with a low inflation level coupled with an objective to support the governing bodys economical objectives of growth and employment. To understand how the Fed monitors price tie in regulations to keep a check on inflation, we whitethorn consider a small example of the regulation of house and property prices. To take any decisions related to interest arrays keeping in mind the ongoing inflation gait, the Fed must be thorough with the booming property prices and must take steps to ensure that the prices are not artificia l.Government intervenes through its central bank to regulate the prices of many commodities, similarly it also regulates the prices of houses like any different important commodity. Fed has the responsibility to keep a check on asset prices including the prices of houses. There dismiss be a number of reasons why the prices of houses may shoot up, like the simple rule of necessitate and supply has a definite impact. (Demand and Supply for Housing).The central bank sets a fixed interest rate at which it lends money to financial institutions and depending on this interest rate, individual banks and other financial institutions set up their own interest rates, which apply to the satisfying economy. This step is of indispensable importance to the economy, as this is very widely used to strike inflation. The only purpose behind such a step is just to contain undue inflationary levels prevailing in an economy. The point to be noted here is that, this interest rate set by the Bank of England is so effective and powerful that it chips in greatly to regulate the whole