Question
The government institution that can create the most money is the Federal Reserve. This bank is responsible for controlling the supply of U.S. dollars. The
The government institution that can create the most money is the Federal Reserve. This bank is responsible for controlling the supply of U.S. dollars. The Congress however, has the power to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures. The Fed has three common used tools to regulate money creation in the economy. These tools are reserve requirements, the discount rate, and open market operations. Each of these tools impacts the money supply in different ways and can be used to contract or expand the economy. The long-run impact of a larger money supply on inflation is that with more money in the economy consumers will have a reduce purchasing power which eventually will lead to a crash in the market. According to both theories of the purchasing power parity, a dollar should be able to buy the same quantity of goods in all countries. This means the rate between the currencies of two countries should reflect the price level of those countries.In conclusion, based on all my research I believe giving out money will eventually lead to a crash in the market. I think it would be better to maybe get assitance through programs instead. Getting help with job placement, food stamps, unemployment benefits, help with going to school and things in that nature would be a better route to help families in poverty. Setting up the families with a way to not only help theirselves, but also contribute to society I think would be beneficial for everyone.
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