Criticisms of the Federal Reserve System Assignment

Criticisms of the Federal Reserve System - Assignment Example M1 is a category of supply of money that includes all the physical money; that is, currency and coins. It also includes negotiable order of withdrawal accounts and checking accounts. M2 is a category of money supply which includes M1 and saving deposits, market funds, and time related deposits. When M1/M2 is defined commercial institutions such as banks create money in the society. Fiscal policy is the way the government influences its economy through controlling its revenue or taxation and its expenditure. The federal reserve alone controls fiscal policy. If any other governmental entity was involved in this, Fed would have been scraped due to the criticism towards it. it is important to have three different governmental entities so that each one of them serves specific purposes for the public. This ensures that the public receives better services since they are handled efficiently. Fed is there in order to take care of a sensitive issue of money. It has a major influence on the economy of a country and therefore should be handled separately. In monetary policy there is an authority to control money supply to promote economic growth (Paul,