Complexities Of The U.S. Financial System

826 words - 4 pages

Complexities of the U.S. Financial System

Synthia Reed
FIN 100
Professor Lester Reid
Strayer University

May 5, 2013

Complexities of the U.S. Financial System
The U.S. financial markets play a big role in the economy. If no one is investing in businesses, they cannot start up, or grow larger to meet the needs of the country or nation. The economy is directly impacted by the amount of stocks bought and sold each day. Before the U.S. stock market crashed in 1929, it was booming. Americans had invested so much money in France that when their economy rose, so did the U.S. It collapsed because Americans pulled their money out of France and put it in U.S. stocks. If ...view middle of the document...

(Melicher & Norton, 2011) The board also directs and coordinates the activities of the twelve Reserve Banks under its jurisdiction as well as implements credit control devices like, the Truth-in-Lending Act, the Equal Credit Opportunity Act, and the Home Mortgage Disclosure Act. Even with the implemented credit control devices to help protect individuals the Federal Reserve in summary directly affects the stock and bond mutual funds along with loan rates and indirectly affects the value of one’s home and if you keep a job or even get rehired.
Interest rates influence the U.S. and global financial environment with the changing rates in stock and bond interest rates, consumer and business spending, inflation, and recessions. When interest rates rise or fall it is referred to as the federal fund rate which is the rate bank’s use to lend each other money. Interest is the amount of money that lenders earn when they approve a loan that the borrower repays, and the interest rate is the percentage of the loan amount that the lender charges to lend the money. Interest gives lenders security of the risk to lend money. Because this rate changes daily it affects both inflation and recession. Inflation is the rise in the price of goods or services over time. The Federal Reserve monitors this to keep the rising prices under control by raising the federal fund rate. Preventing inflation to...

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