Structure of the Fed—The Federal Reserve (the Fed) was established nearly 100 years ago by the Federal Reserve Act of 1913 and is comprised of the following three main bodies: - The Board of Governors - The Federal Reserve Banks - The Federal Open Market Committee (FOMC)  Click here to learn more about the Structure of the Federal Reserve.
Goals of the Fed—The Federal Reserve actually has the following six general goals that it is trying to meet—which were established by the U.S. Congress in the Employment Act of 1946 and the Full Employment and Balanced Growth Act of 1978. - Stability in the financial system - Price stability—fighting inflation - Full employment - Economic growth - Interest rate stability - Currency stability Click here to learn more about the Goals of the Federal Reserve. Tools of the Fed—Congress, along with giving the Fed goals that it has to accomplish, gave the Fed tools and authorities to enable it to meet its goals. Let's take a look at the following primary tools the Fed uses to affect monetary policy: (Video Below) tools of the federal reserve - Reserve requirements - Discount rate - Federal funds rate Click here to learn more about the Tools of the Federal Reserve. Open Market Operations of the Fed—Once the Fed has set its monetary policy guidelines, it has to go out into the market and implement that policy. If the Fed wants to loosen its monetary policy, it has to find a way to get money into the financial system. If the Fed wants to tighten its monetary policy, it has to find a way to get money out of the financial system. To understand how the Fed does this, you have to understand the following pieces of the Fed's open market operations: - Trading desk at the Federal Reserve Bank of New York - Primary dealers - Repurchase agreements (repos) Click here to learn more about the Open Market Operations of the Federal Reserve. | 
