Question

What is the role of the federal reserve and how does it impact you? Stax)

Answer 1

the federal reserve is the central bank and as such is responsible for conducting the monetary policy of the country. It controls the amount of money that can stay in the system at a particular point in time based on economic conditions. It directly impacts you as thr federal reserve achieves its objectives by changing the interest rates. Interest rate is the cost of borrwoing money and if the Fed increases the interest rates, it will increase your cost of borrowing and reduce the amount you borrow. Thus, your consumption or investment may reduce as well. Thus, Fed has the power to regulate how much firms and individuals borrow from the financial system.