The Federal Reserve
Lizzie Hoven 1b
History of the Fed
The Fed's Goals and Responsibilities
Board of Governors
The FOMC and Monetary Policy Tools
The monetary policy tools are important to keeping the economy in check. One of the tools used is Open Market Operations which is buying and selling of government bonds to either expand or decrease the amount of money in the banking system. Another tool is Discount Rate, or the interest rate that is charged to commercial banks and can sometimes change few times a year. One more tool is Reserve Requirement which is the amount of money banks are supposed to have on hand, and is most of the time held in cash.
Inflation is considered normal today, unless it becomes too high, then there's a problem. Inflation is when the prices are rising quickly and people are spending too much money. It's the Fed's job to balance this out by holding people back from spending money to balance the economy, and bring it back at 'normal'.
Recession is when there's an economic decline. The economy becomes slow and goes down causing spending and trade to go down. This also causes the employment to go down because less jobs become available.
Depression is when the economic decline goes down even further, it is like recession, but way worse. They always coincide with each other, but the main difference is in the way they decline; how fast, how 'steep', etc. During depression, there is a very rapid decline, but during recession the decline isn't as severe.