Sample Economics Essay Paper on The Federal Reserve

The Federal Reserve

The Federal Reserve is an institution mandated with the implementation of the monetary policy in the country. The organization controls the supply of money and determines the credit conditions of the financial bodies in the states. Additionally, the Fed impacts the level of interest rate to influence the interest-sensitive expenditure such as household spending on consumer goods and residential investment (Labonte, 2018). Based on the degree of the Fed’s capability to enhance economic growth by controlling the flow of money and regulating financial firms, it does not overstep on its responsibility.

My Opinion on the Federal Reserve Monetary Policy

The enactment of the Federal Reserve Act in 1913 acted as the last resort in which the government can acquire financial support to enhance its development agendas. The institution is bestowed with the responsibility of implementing the monetary policy and regulating various forms of banks for safety and security. Additionally, the Fed offers payment system services to different financial bodies and the government. During the financial crisis in the year 2007 to 2008, the Fed reduced the interest rate primarily to mitigate the impacts of inflation (McBride & Chatzky, 2018). Notably, the Federal Reserve observes its statutory role of enhancing employment, stabilizing product prices, and moderating long-term interest rates. The actions aim at increasing the country’s economy and averting incidences of a financial predicament as witnessed in 2007. Therefore, the Fed has not taken its monetary policy to the extreme and is working within its jurisdiction.


The Federal Reserve is an institution embodied with the responsibility of controlling various financial bodies, product prices, and enhancing employment in the country. During the period of economic crisis in the U.S, the Fed reduced the level of interest rates purposely to alleviate the impacts of inflation and increase the level of employment. Equally, the organization controls the supply of money in the economy. Therefore, the Fed performs within its jurisdiction by not overstepping on its responsibilities.


Labonte, M. (2018). Monetary Policy and the Federal Reserve: Current Policy and Conditions [Ebook] (1st ed., pp. 1-23). Congressional Research Service. Retrieved from

McBride, J., & Chatzky, A. (2018). The Role of the U.S. Federal Reserve. Retrieved from