Macroeconomics
Lynnette M. Phillips
Everest University
ECO- 3007-10

Macroeconomics
Chapter 15: 1- The Fed Holds Depository Institutions’ Reserves & Provides Payment Clearing Systems- This acts as a regional clearinghouse to exchange or clear checks that have been deposited at one institution but written on another. The Fed settles checks by moving the funds required from a payee to payer institution, (credit union, savings institution or commercial banks). 2- Fed Acts as Government Fiscal Agent- The main services are insurance & redemption of securities on behalf of the Treasury, Federal agencies, other entities and the processing of payments to & from the Federal government. The Treasury & Reserve banks implement new web base technology to improve the Fed government’s provision with services in areas of security & payments, collections with government finance reports. The challenge is to manage complex & rapid information technologies while still being able to maintain high standards of security, efficiency and reliability. 3- Fed Conducts Monetary Policy- This is done by the nation’s central bank (Federal Reserve System) & influences demand mainly by raising & lowering short term interest rates. The Fed conducts monetary policy to fight inflation & promote economic growth. One of the most important tools for the Fed to conduct monetary policy is to open markets operations options to conduct monetary policy. 4- Fed Intervenes in Foreign Currency Markets- This is the most common reason because any sharp or sudden decline in the value of currency, caused by high volatility from surge trading with market players, the government or central bank will use the foreign exchange market intervention to stabilize the situation. Intervention can increase or decrease the currency value. This is a common purpose of