The Federal Reserve Essay Example | Topics and Well Written Essays - 2000 words - 3

The Federal Reserve - Essay ExampleTherefore, in pursuing these functions Fed aim to stimulate prices and attain maximum drill. The Federal Reserve tightened it policy after the country suffered from a 2008-2010 financial crisis. Moreover, the bank increased regulations in the financial sector to scrap on bank lending behavior that caused the housing bubble to burst. These measures have achieved tremendously as indicated in the recent Beige Book. The economy at a national level is growing, and this shows that the country is on the path out of the financial crisis. The Board says that consumer confidence has increased, and business buoyancy is rising too. The Beige Book (2013) report that the national economic conditions have expanded during the month of September to October. All the twelve Federal Districts had similar lay outs of growth, though some like Richmond, Philadelphia, Kansas and bread showed slowed growth rate as comp ard to earlier reports. Moreover, the Districts we re optimistic of growth in future economics behaviors, but they also feared uncertainty as a leave behind of increased debate on the debt ceiling and disposal shutdown. The country has increased consumer spending and people are travelling more in all close to all the districts. Furthermore, tourism has also increased, and businesses are now growing. This can be attributed to increased payrolls in many Districts. The Fed reports that there is increased demand for manufacturing activities and nonfinancial services. Residential construction has resumed, and it is increasing pace by pace. The lending rate has remained modest, and there was little change in the financial balances. The agricultural sector has been affected, and most districts reported that drought impacted the sector. The energy sector has expanded, but there has been reduced production of coal. Therefore, the overall price condition and wage was stable and without push (Board of Governors of the Federal Reserve Syste m, 2013). Economic Indicators That Guide In Stabilizing the Economy Economic indicators are voluminous statistics of the economic conditions that are used by the government in measuring and evaluating the growth of the economy. There are many economic indicators and each function differently from the other. Some indicators have short term effectuate on the economy while others have short term and long term effects. These indicators include real gross domestic product, funds supply, consumer price index, consumer confidence, employment rate and housing starts. Real GDP help the Federal Reserve to know how it will utilize monetary policies to the changes in the economic conditions. Its shows the market appeal of a countries goods market produced at the current period. Real GDP shows the countrys wealth by demonstrating the returns on capital and the growth of profit in businesses and service industries. Real GDP, therefore, measures the well being of a country economic activity. Co nsequently, Fed must use tight monetary policies to ensure that the interest rate is not below the set target of 2%. Low interest rates render the Federal Reserve policies ineffective in controlling the money supply (Labonte, 2013). Employment is the other economic indicator the Federal Reserve ought to address to maintain the path of economic growth. The employments statistics are derived from the payrolls, retail trade, construction and manufacturing and are used in determining the level of unemployment and the well being of the country. Increase in wages enhances