Open Market Operations of the Federal Reserve System
Functions of the Federal Open Market Committee (FOMC)
To many Americans, it may appear that U.S. monetary policy is the work of one man, Alan Greenspan, Chairman, Board of Governors of the Federal Reserve Board ("The Fed"). But that is only because Dr. Greenspan, while certainly an extremely powerful and influential person, is just the most visible of a number of powerful and influential individuals serving on important boards. In the background, out of the limelight, are many other key players, including members of the Federal Open market Committee (FMOC) (which Dr. Greenspan also chairs).
What are the short-term functions of the "open market operations" of the FOMC? Basically, the FOMC sells and purchases U.S. Treasury securities, and securities from federal agencies. This is an important series of tasks, since these transactions are the primary tools for implementing monetary policy established by the Federal Reserve. The primary immediate goal of "open market operations" is to maintain a desired quantity of financial reserves, at a desired price, which is determined as the "federal funds rate." And the "federal funds rate" is the interest rate at which banks and other financial institutions lend balances at the Federal Reserve - to other "depository institutions" around the country through overnight transactions at the Federal Reserve.
What are the overall key functions of the FOMC? The 12-member policy-making committee meets eight times a year (their regularly scheduled sessions) to carefully scrutinize current economic and financial conditions in the country. Then, at those sessions, the FOMC determines the most appropriate plan for ongoing U.S. monetary policy, and also evaluates what risks there may be to the economic picture. If important or crisis-related monetary issues come up between the regularly scheduled meetings, the board may be called to an emergency session, or, be linked on a "conference call" to review and make decisions.
Since the FOMC is the most important policy-making arm of the Federal Reserve, FOMC makes decisions to advance the long-run objectives of "price stability and sustainable economic growth," according to the Federal Reserve's Web site. Basically, big picture of the FOMC's role is one of stimulating the economy,...
Open Market Operations Monetary policy may involve several facets, including reserve requirements, discount rate and interest rate targeting. The U.S. Federal Reserve's long-time strategy has been to use interest rate targeting through Open Market Operations primarily to keep the economy in its attempts to keep the economy in a state of equilibrium. Today, open market operations (purchase and sale of U.S. Treasury and other federal agency securities) are the principal tool used
FEDs and MoneyAre CCs and Debit Cards Money?Credit cards and debit cards are not money but are actually considered tools or financial instruments that facilitate transactions in which money is exchanged. Both types of cards represent a convenient way to access and spend funds in a bank account (or made available to one via a line of credit). Because they are accessing different types of accounts, they act differently (Chand,
With respect to its operations, Verizon Wireless is unparalleled. Indeed, it "is one of the strongest competitors due to the foundation of its large nationwide service area and strong customer base. With two quarters of 1.9 million net additions, it has set the bar for competitors to reach." (BW, 1) This is based on a convergence of extremely visible advertising tactics via television, radio, billboard and sponsorship with a service
4 (rezoning and building shopping center) = 0.7 times $4,000,000 + 0.3 times $5,000,000 = $4,300,000 The p (rezoning and building shopping center) is the best solution, with the expected return at 0.6 times $4,300,000 + 0.4 times $2,400,000= $3,540,000 This means that the expected net profit will be $540,000 Question 4 a) I am assuming that the greatest advantage of the work-in-process inventory is that the production is always associated and correlated with
However, the same Republicans in the House and Senate who resisted the passage of the last stimulus bill, despite double-digit unemployment, are agitating for Ben Bernanke to raise interest rates and to curtail the expansive open market operations policy. They also said that the bank bailouts "rewarded" failure, despite the risks of global insolvency posed by mass bank failures (Isidore 2009). While the Fed certainly could have been more proactive
Likewise this cycle of purchases can be broken with a tightening of the money supply, having a negative impact on the GDP. Unemployment is affected as well. As money supply is loosened, businesses are encouraged to expand. Capital is more readily available to finance expansion, and a growing GDP further encourages this expansion by providing more money in the market to purchase the new goods or services that the expansion
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