and why the dollar has value
Anything used as an exchange medium is considered to be money. Anything extensively used as a form of exchange is referred to as a medium of exchange” and thus qualifies to be referred to as “money.” For instance, Kent tobacco cigarettes were used as a form of exchange in Romania during the Communist Party’s reign in the 1980s; the idea that they could be traded for other products and services rendered them valuable and can be referred to as money (Smit et al., 2016). Like the value of products and services, money is also valued in terms of demand, what individuals are willing to exchange for money, and the amount of money available. The main reason why a dollar is valued is because of its acceptability. I value a dollar because I anticipate that a seller will accept it in return for their goods or services. The seller must assume that by accepting the dollar, it will also be accepted by other sellers in the future. The dollar’s ability to be used to purchase American products, services, and assets ultimately determines its worth.
Money supply in the United States
The total amount of money, coins, and deposits in all the bank accounts circulating is referred to as the money supply (Devadoss & Meyers, 1987). It is typically described as a bundle of safe assets that consumers and business enterprises can use to accept transactions or . For instance, many measurements of the money supply include balances in checking and savings accounts and U.S. cash. Measures of the money supply have occasionally shown quite close correlations with significant economic factors, including the actual gross domestic product and also the level of prices. Economists have claimed that the supply of money controls the price, is inflationary over the long run and offers crucial data about the economy’s near-term trajectory based on these links. Measurements of the money supply are occasionally a key consideration for the Federal Reserve when implementing monetary policy. The amount of money in circulation in the U.S. dropped from 6134500 USD in March 2022 to 5885200 USD in April.
The primary functions of the Fed and the role of FOMC in the economy
The Federal Reserve System (FRS) is the American central bank. It is popularly referred to as “the Fed” and is arguably the most powerful financial institution in the world. It was created to provide the country with a stable, flexible, and long-lasting financial and economic system (Meade & Sheets, 2005). Each of the 12 regional Federal Reserve Banks that make up the Fed is in charge of a specific country region. Participating institutions with no alternative funding sources play the role of the lender of last resort. Its responsibility is to guarantee the system’s financial stability.
Additionally, it serves as the primary financial institution regulator in the nation. The Federal Open Market Committee (FOMC), a division of the Federal Reserve System (FRS), directs open market operations to decide the future of budgetary policy in the United States. FOMC members gather eight times annually to decide whether to alter short-term monetary policy. To support the national economy’s expansion, the members vote on whether or not to change the policy. They result in either reselling or purchasing U.S. government bonds on the open market.
The role of the financial institutions in the U.S. financial system
Financial institutions’ primary responsibility is to give the economy liquidity so it can function at a greater level than it otherwise could. The Brookings Institute claims that banks achieve this in three ways: by providing loans, controlling markets, and allocating risk among customers. Financial institutions have a significant impact on the investment component. They make it easier for people to save money and make investments in the economy (Merton & Bodie, 1995), both of which are necessary for economic growth. Without banking institutions, people wouldn’t be able to benefit from changing interest rates, and the only way to save money would be to stuff it beneath your pillow in stacks.
Fractional Banking Reserve and its benefits to customers
Fractionally reserved banking is a method whereby a bank receives deposits, makes loans, and keeps enough money in reserve for depositors. In the United States financial market, the Federal Reserve System regulates bank operations and sets a cap on the number of money banks can lend out (Angel, 2016). The volatility of money is the main advantage of the fractional reserve for an economy. To put it another way, this system keeps money flowing from one person or organization to another. A thriving and healthy economy depends on the flow of money. The Fed altered member bank reserve requirements during the financial meltdown of 2008, increasing the amount of money available to meet depositor needs.
Tools for controlling the money supply by the Fed
The Fed’s four critical monetary policy instruments for regulating the quantity of currency in circulation are the reserve ratio, open market operations, discount rate, and earnings on reserves. When the money supply is high, the Fed sells government securities in an open market operation to reduce the amount of money in people’s hands. Also, the government increases the lending interest to discourage people from borrowing when the supply is high. It also decreases the reserve ratio to ensure banks reserve more money than they lend. Among the available tools, the most significant method is increasing the lending interest rates, which discourages people from borrowing; hence, the Fed can regulate the money in circulation.
How the money multiplier help determine the effects of monetary policy
The money multiplier explains how a smaller starting rise in the total amount of money causes a more considerable final rise. It also goes by the name “monetary multiplier,” and it denotes the extent to which changes in the volume of deposits impact the money supply (Kigabo, 2015). It shows the proportion of money stock to changes in deposits that are correspondingly less or larger. The Federal Reserve in the United States has the power to control the supply of money and the nation’s economy by altering the reserve ratio. The goal is to find a balance between preventing inflation and promoting economic growth.
Monetary policy vs. fiscal policy
Monetary policy is the term used to describe how central banks regulate the amount of money circulating in the economy. When there is a low amount in the economy, Feb usually applies the policy and makes financing less costly, which encourages borrowing, increasing the money supply. The the monetary sector to lower interest rates to stimulate a faltering economy. If the economy grows too quickly, the Fed may implement a stringent macroeconomic stimulus by raising the borrowing interest rates, which in turn ends up decreasing the money from circulation. Fiscal policy, on the other hand, deals with regulating the amount of tax revenue collected by the federal government and how it is utilized to strengthen the economy. When the government intends to stimulate the economy, they usually decrease tax rates and, in turn, increase the expenditure. When they want to control the money supply, the government usually increases taxes while decreasing spending to cool an overheating economy.
Summary
The money supply in the economy is a crucial determinant of economic growth.
Every country around the globe requires a central bank to help with financial regulations.
Financial institutions play a vital role in the development of the economy.
It is a requirement by the central bank for all the commercial banks to have fractional reserve funds.
Monetary policy is concerned with the economy’s money supply level, while fiscal policy deals with the amount of revenue collected.
References
Smit, J. P., Buekens, F., & Du Plessis, S. (2016). Cigarettes, dollars and bitcoinsan essay on the ontology of money. Journal of Institutional Economics, 12(2), 327-347.
Devadoss, S., & Meyers, W. H. (1987). Relative prices and money: further results for the United States. American Journal of Agricultural Economics, 69(4), 838-842.
Meade, E. E., & Sheets, D. N. (2005). Regional influences on FOMC voting patterns. Journal of Money, Credit and Banking, 661-677.
Merton, R. C., & Bodie, Z. (1995). A conceptual framework for analyzing the financial system. The global financial system: A functional perspective, 3-31.
Angel, J. (2016). On the ethics of fractional reserve banking. Journal of Competitiveness Studies, 24(3), 164.
Kigabo, T. (2015). Monetary and financial innovations and stability of money multiplier in Rwanda. Journal Issues ISSN, 2350, 157X.
Get Professional Assignment Help Cheaply
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Why Choose Our Academic Writing Service?
- Plagiarism free papers
- Timely delivery
- Any deadline
- Skilled, Experienced Native English Writers
- Subject-relevant academic writer
- Adherence to paper instructions
- Ability to tackle bulk assignments
- Reasonable prices
- 24/7 Customer Support
- Get superb grades consistently
Online Academic Help With Different Subjects
Literature
Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.
Finance
Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.
Computer science
Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!
Psychology
While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.
Engineering
Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.
Nursing
In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.
Sociology
Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.
Business
We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!
Statistics
We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.
Law
Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.
What discipline/subjects do you deal in?
We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.
Are your writers competent enough to handle my paper?
Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.
What if I don’t like the paper?
There is a very low likelihood that you won’t like the paper.
Reasons being:
- When assigning your order, we match the paper’s discipline with the writer’s field/specialization. Since all our writers are graduates, we match the paper’s subject with the field the writer studied. For instance, if it’s a nursing paper, only a nursing graduate and writer will handle it. Furthermore, all our writers have academic writing experience and top-notch research skills.
- We have a quality assurance that reviews the paper before it gets to you. As such, we ensure that you get a paper that meets the required standard and will most definitely make the grade.
In the event that you don’t like your paper:
- The writer will revise the paper up to your pleasing. You have unlimited revisions. You simply need to highlight what specifically you don’t like about the paper, and the writer will make the amendments. The paper will be revised until you are satisfied. Revisions are free of charge
- We will have a different writer write the paper from scratch.
- Last resort, if the above does not work, we will refund your money.
Will the professor find out I didn’t write the paper myself?
Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.
What if the paper is plagiarized?
We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.
When will I get my paper?
You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.
Will anyone find out that I used your services?
We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.
How our Assignment Help Service Works
1. Place an order
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
2. Pay for the order
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
3. Track the progress
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
4. Download the paper
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.
PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!
