Federal Reserve in stabilizing the economy using monetary policy tools. The paper is divided into six major sections. The first section introduces the Federal Reserve by highlighting its objectives, roles, and composition. The second section explains its role and effectiveness in stabilizing the current U.S. economy. The next section discusses some important economic indicators which the Federal Reserve can analyze for better economic stabilization. The fourth section is dedicated for a brief discussion on different monetary policies which the Federal Reserve can use to influence the money supply in the country. The final two sections explain the strengths and weaknesses of monetary policy as compared to fiscal policy and its effect on the aggregate demand and supply model.

Introduction: The Federal Reserve

The Federal Reserve System is the central bank of the United States of America. It is also called as Federal Reserve or simply as Fed. It is the...
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