Economics Of The Federal Reserve System Is The United...

Dear Mr. Peter Politico, Hello I am Kim Billiot, I have been hired as your economics advisor to help you further understand the concepts and give guidance on economics and provide you with knowledge resource that will help you for your debate. Detail below explain the term of economics and have been broken down to further explain each concept and explanation to why these events occur. Good luck on your debate and if you should need any further assistance I am happy to oblige. To start off The Federal Reserve System is the United States central bank. The Federal Reserve System was founded by Congress in 1913 to provide a safer nation for everyone by giving stable monetary and financial system. Throughout the years, their roles in banking†¦show more content†¦The economy has a continuing path of expansion and contraction; these are the fluctuations that create a business cycle. The GDP gives the sum total of consumer spending, industry investment, exports compared to imports and our government spending. The GDP increase does not reflect the correct growth of the economy and inflation must be subtracted to reflect the true percentage, this is called the real GDP and tells us if the economy is expanding or contracting. If the economy falls we start a recession. The point when expansion becomes a recession becomes the peak of business cycle and the point when recession becomes expansion is the trough. Inflation describes the increases in the average price and deflation is the decrease of the average price. Both inflation and deflation are the percentage rate that changes the price index and hurts the value of real money. Inflation is an increase in the general price of goods and services over a period of time. Unexpected inflation benefits the borrowers and hurts the lenders. Inflation is the reduction in purchase power. Inflation affects the value of money. Inflation or deflation is the percentage change of price index, once these calculations take eff ect we can use the (CPI) consumer price index and is widely used in the United States to level out price changes. Normal values are converted to real values by dividing the price index.