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I have to write a paper thats a few pages long that is basically a response to some type of article about government policies that effect the market?

If anyone out there could find some internet articles that deal with this I would really appreciate it, I'm not asking for you to do my homework, I am going to do everything else, I am just really having trouble finding an article.

Thanks you guys rock!

2007-02-22 14:45:00 · 2 answers · asked by Mat 2 in Education & Reference Homework Help

2 answers

The Federal Reserve System implements monetary policy largely by targeting the federal funds rate. This is the rate that banks charge each other for overnight loans of federal funds, which are the reserves held by banks at the Fed. This rate is actually determined by the market and is not explicitly mandated by the Fed. The Fed therefore tries to align the effective federal funds rate with the targeted rate by adding or subtracting from the money supply through open market operations.

The Federal Reserve System also directly sets the discount rate, which is the interest rate that banks pay the Fed to borrow directly from it. However, banks usually prefer borrowing fed funds from other banks, even at a higher interest rate, rather than directly from the Fed, because that might suggest problems with the bank's credit-worthiness or solvency.

Both of these rates influence the prime rate which is usually about 3 percentage points higher than the federal funds rate. The prime rate is the rate at which most banks price their loans for their best customers.

Lower interest rates stimulate economic activity by lowering the cost of borrowing, making it easier for consumers and businesses to buy and build. Higher interest rates slow the economy by increasing the cost of borrowing. (See monetary policy for a fuller explanation.)

http://en.wikipedia.org/wiki/Federal_Reserve_Board#Control_of_the_money_supply

2007-02-22 15:29:03 · answer #1 · answered by Joe Schmo from Kokomo 6 · 0 0

goverement policies that effect the market. Well, I think if you went on one of the goverement based websites they would have it like if you went to the senators or governors website.

2007-02-22 15:20:44 · answer #2 · answered by ? 5 · 0 0

fedest.com, questions and answers