Exploring the Role of the Federal Reserve Bank The Federal Reserve Bank(the“Fed”)is the central bank of the United States.One of its jobs is to manage the money supply.Sometimes it increases the money...

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Analysing the role of the Federal Bank
One action that Federal Bank can take into consideration for raising interest
It can be said that the action that can be undertaken by the Federal Bank for enhancing the rate of interest and reducing the money supply is include increasing the reserve requirements with regard to the banks. One of the main reasons behind this is that when the requirements of the reserve are high then it will indicate that the bank should hold more funds in the reserve. It will be reducing the supply of money as well as when the supply of money enhances the cost of borrowing is higher, hence it allows for a higher increase in interest rate (Aisen and David 2511).
What is recommended to the Federal Government given the present condition
Given the present scenario, it can be observed that the yield curve is highlighting an inverting trend. It specifically showcases the fact that individuals are expecting a recession as well as so there is a requirement for enhancing the supply of money in the economy along with lowering the rate of interests. It will also encourage the individuals for taking more loans and boosting the economic activity. An increase in the supply of money works both via lowering interest rates, which will be enhancing investment. The supply of money is quite vital as it will have one of the most powerful effects on the economic activity. One of the most vital determinants of the supply of money is the Federal Reserve Money. As individuals begin...