FEDERAL RESERVE PAPER

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The Federal Reserve System is also known as the central banking system of the United States. The Federal Reserve System is run by the Board of Governors, and is composed of 12 regional banks. The Federal Reserve Bank is independent of political pressure decisions that a government influenced by political pressures cannot make.

Adjusting the Discount Rate and Effects on the Interest Rates

The discount rate is known as the rate of interest the Federal Reserve System (Fed) charges for loans made to banks. The Federal Reserve (Fed) raises or lowers the interest rate it will cause a domino effect. The Fed raising the interest rates, will cause the banks to raise their prime rate; which affects