1. Federal Reserve
By: [Your name here]

2. Federal Reserve Functionality
Conduct the nation’s monetary policy
Supervise and Regulate banking institutions
Maintain Stability of the financial system
Provide financial services to various institutions
The Federal Reserve’s duties fall into four general areas which are the conduct of the nation’s monetary policy, supervising and regulating the banking institutions, maintaining the stability of the financial system, and providing financial services. The federal reserve conducts the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates. It supervises and regulates banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers. It maintains the stability of the financial system and containing systemic risk that may arise in financial markets. It also provides financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system. (Federal Reserve)

3. Decision Makers President of the US 7 members of the board
Chairman and Vice Chairman
of the board
The Board of Governors of the Federal Reserve System is a federal government agency. The Board is composed of seven members, who are appointed by the President of the United States and confirmed by the U.S. Senate. The Chairman and the Vice Chairman of the Board are also appointed by the President and confirmed by the Senate. The nominees to these posts must already be members of the Board or must be simultaneously appointed to the Board. The terms for these positions are four years.
The full term of a Board member is fourteen years, and the appointments are staggered so that one term expires on January 31 of each even-numbered year. After serving a full term, a Board member may not be reappointed. If a member leaves the Board before his or her term expires, however, the person appointed and confirmed to serve the remainder of the term may later be reappointed to a full term.

4. Federal Reserve & Monetary System
Objectives:
Maximum Employment
Stable Prices
Moderate long-term interest rates
The Federal Reserve sets the nation’s monetary policy to promote the objectives of maximum employment, stable prices, and moderate long-term interest rates. The challenge for policy makers is that tensions among the goals can arise in the short run and that information about the economy becomes available only with a lag and may be imperfect. The goals of monetary policy are spelled out in the Federal Reserve Act, which specifies that the Board of Governors and the Federal Open Market Committee should seek “to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” (Federal Reserve)

5. Money Supply Increase with Banks
The Federal Reserve influences the economy through the market for balances that depository institutions maintain in their accounts at Federal Reserve Banks. Depository institutions make and receive payments on behalf of their customers or themselves in these accounts. The end-of-day balances in these accounts are used to meet reserve and other balance requirements. If a depository institution anticipates that it will end the day with a larger balance than it needs, it can reduce that balance in several ways, depending on how long it expects the surplus to persist.
For example, if it expects the surplus to be temporary, the institution can lend excess balances in financing markets, such as the market for repurchase agreements or the market for federal funds.

6. How is Inflation Measured?
Examples of changes in the Economy:
Jobs
Prices
Inflation is measured by the changes in the economy such as sudden layoffs of jobs or sudden increase of jobs, and prices of goods lowering or getting higher. Changes in the equilibrium signal this type of inflation. If the economy slows and employment softens, policy makers will be inclined to ease monetary policy to stimulate aggregate demand. When growth in aggregate demand is boosted above growth in the economy’s potential to produce, slack in the economy will be absorbed and employment will return to a more sustainable path. (Federal Reserve)

7. Causes of Inflation
Again, the causes of inflation are determined by certain affects that happen to different industries. One of the obvious industries would be jobs and goods. When goods that we buy from oversees are limited, then prices increase which creates a change in the prices for the US. Again, if the economy slows and employment softens, policy makers will be inclined to ease monetary policy to stimulate aggregate demand. When growth in aggregate demand is boosted above growth in the economy’s potential to produce, slack in the economy will be absorbed and employment will return to a more sustainable path.

8. Natural Disasters and Inflation
Natural Disasters cause:
Major inconveniences
Disruptions of everyday business
Demand to increase
Supply to decrease
In my opinion natural disasters are causes for inflation because they are an abrupt change within our equilibrium. Any change that affects a vast number of people can cause and inflation because things are destroyed which raises demand and lowers supply. According to the Federal Reserve, natural disasters, disruptions in the oil market that reduce supply, agricultural losses, and slowdowns in productivity growth are examples of adverse supply shocks. Such shocks tend to raise prices and reduce output. Monetary policy can attempt to counter the loss of output or the higher prices but cannot fully offset both. The public will see the evidence in the Consumer Protection Laws such as the Flood Disaster Protection Act of 1973, which requires flood insurance on property in a flood hazard area that comes under the National Flood Insurance Program.

9. Fear of Inflation Some fears of Inflation: Unpredictable
Loss of employment
Prices will continue to increase
Markets will crash
There is an obvious fear of inflation. We are currently experiencing that fear with our current state of the economy. We fear many things such as losing our jobs, the prices of gas, and the housing market. These things are feared because resolving inflation is unpredictable. There are many things we can do, such as the stimulas that the president just did, but there is still no way to know how people will react and take action. The Federal Reserve has a credible anti-inflation policy which leads businesses and households to expect less wage and price inflation. According to the Federal Reserve, “…workers then will not feel the same need to protect themselves by demanding large wage increases, and businesses will be less aggressive in raising their prices, for fear of losing sales and profits. As a result, inflation will come down more rapidly, in keeping with the policy-related slowing in growth of aggregate demand, and will give rise to less slack in product and resource markets than if workers and businesses continued to act as if inflation were not going to slow.” (Federal Reserve)

10. Conclusion Federal Reserve is the answer
Overall, the Federal Reserve is the answer. There are so many uncertainties with the economy and prices. We are well aware of that at this time. The Federal Reserve has implemented many laws and constructed many solutions to help us in these times. The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded. It will continue to expand and improve and that is why it is the solution.

11. Reference
The Federal Reserve System (2008). Retrieved February 15, 2009 from