The Federal Reserve System, also known as the Fed, is the central banking system of the United States of America created on December 23, 1913, after a series of financial panics which led to a central control of the monetary system in order to alleviate financial crises.
To Combat the Financial Crisis the Federal Reserve has Created Many Tools such as the Reserve Requirement, the Fed Funds Rate, Interest on Reserves, Reverse Repos, Margin Requirements, Open Market Operations, Discount Window, Discount Rate, Fed's Alphabet Soup, Monetary Policy Report and Money Supply. This last, the money supply could be considered as one of the primary tools used by the federal reserve in response to economic booms and recessions since it consists in Manipulating Interest Rates and involves raising/lowering interest rates to slow/spur economic activity.
The effect of this tool on the Economy is an increased in the supply of money due to the lowers interest rates, which puts more money in the hands of consumers, stimulating spending and a higher overall economic.
