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Katena32 [7]
3 years ago
12

Why is money effective and what are its different forms? What is the Federal Reserve and what its role?

Social Studies
1 answer:
STatiana [176]3 years ago
8 0

Explanation:

money is effective because Money has an energy of its own and it is largely attracted to people who treat it well. Money tends to flow toward those people who can use it in the most productive ways to produce valuable goods and services, and who can invest it to create employment and opportunities that benefit others.

forms: Money comes in three forms: commodity money, fiat money, and fiduciary money. Most modern monetary systems are based on fiat money. Commodity money derives its value from the commodity of which it is made, while fiat money has value only by the order of the government.

federal reserve of money: The Federal Reserve, as America's central bank, is responsible for controlling the money supply of the U.S. dollar. The Fed creates money through open market operations, i.e. purchasing securities in the market using new money, or by creating bank reserves issued to commercial banks.

role of money: Money serves as a medium of exchange, as a store of value, and as a unit of account. ... Medium of exchange. Money's most important function is as a medium of exchange to facilitate transactions.

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