WHO MAKES MONETARY POLICY?
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Monetary policy is determined by a country's central bank.
In the United
States, the central bank is called the Federal Reserve, or simply the
Alan Greenspan, the current chairman of the Fed, is called by
many the "second most powerful man in the world" for his ability to affect the
worldwide economy. His words often move markets as he ponders future actions for
the Federal Reserve.
The Federal Reserve controls the supply of money through changes
in interest rates and through the purchase and sale of U.S. Government
But how do these actions affect the entire economy? In the
next section, you will learn how monetary policy affects the