Abstract:
The U. S. government influences the economy through changes in its fiscal and monetary policies. Fiscal policy is concerned with the taxing and spending decisions of the government. Monetary policy deals with the supply of money in the economy. Since 1913 the U. S. government has implemented its monetary policies through the policy instruments the Federal Reserve System. An understanding of the Federal Reserve System and the policy instruments at its disposal is helpful toward an understanding of the effects of these instruments on the supply of money and credit in the economy.