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Federal Reserve System: Inflation Essay

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Updated: Nov 17th, 2021

Weak economical positions all around the world experience a high rate of inflation; the problem is to be solved by the Federal Reserve System, the principal function of which is concentrated on inflation control without recession triggering. It is necessary to investigate the principle functions and role of the system to understand the methods through which it combats the problem of inflation spreading.

The article ‘ by Richard Cook; this source can be used to describe the central threat of inflation and identify the principal steps to be developed by central banks, government, and Federal Reserve, to control inflation and balance it with the economical development within the state. The article will be used in the research project to reflect the power of the Federal Reserve System and its annual planning and economical assessment for monetary market stabilization.

Uncontrolled inflation can lead to unexpected destruction of the national economy of the country; the project is focused on the examination of key methods allowing moderating the influence of inflationary trends on the national economics. Ben Bernanke, 2005, managed to exemplify industrialized countries where the Federal Reserve is based on inflation targeting adoption being the background of monetary policymaking.

Primary sources for the research project conduction are to be taken from internet sites disclosing the historical and political value of the Federal Reserve for economical development; thus, Lawrence White, 1982, dedicated his work ‘Policy analysis, Inflation and Federal Reserve: The Consequences of Political Money Supply’ to the disclosure of historical overview US Federal Reserve activities, covering the peculiarities of coping with inflation problems. This work will be helpful for the highlight of the key balances and fluctuations in the inflation rate in different periods of American economical development. The project team can stick to various historical and modern economical encyclopedias as secondary sources, to follow the stages in the structural and functional form of the Federal Reserve.

The central project objectives are concentrated on the identification of the principal functions of the Federal Reserve; so, the inflation control is fulfilled through the following tasks: 1) national banking system supervision to assure consumers; protection; 2) serve the function of the Central Bank for the government and other baking systems; 3) stability maintenance within financial markets, especially under the threat of potential crisis.

To conduct an effective business project on Inflation and Federal Reserve System, it is necessary to follow the definite aspects in the literature and online sources searching, which will allow supporting the provided conclusions: to identify the ways of Federal Reserve affection on the economical stabilization within the US; to follow historical stages in the activities of Federal Reserve; to identify the basic structural peculiarities of the system; to provide a list of necessary sources supporting the facts described in the research paper.

It is necessary to conduct microeconomic research within the American business and industrial system to identify the direct connection between the real economy and price inflation; besides, the project is to cover the necessary monetary policy to be worked out for effective problem-solving. For example, Solow and Taylor, 1999, provided the required data through the illustration of key microeconomic models in their book ‘Inflation, Unemployment, and Monetary Policy’; it is necessary to underline the fact that this work will be used for identification of the most significant and effective measures to be provided for tackling inflation problem.

It is necessary to provide the methods through which monetary control is fulfilled and underline the basic sources of influence on its development. The project should touch on the concepts of ‘reserve ratio’ and ‘discount rate’ being involved in the activities and strategic planning of the Federal Reserve. It should be stressed that an open market system is usually achieved using certain transformations within the reserve ratio, to be investigated in the project.

The team can stick to economical and political reports of various prominent trends, covering the aspect of inflation balance in the national economy. For example, ‘Rapid trends – Gold and Silver Bullion’ discusses the industrial view on the economical position of the USA through the inflation impact on its development. The article discloses some figures characterizing the position of US currency in international monetary markets.

So, the project, being dedicated to the highlight of the Federal Reserve’s role in inflation stabilization, will be predominantly based on the research of internet resources, articles, and books, as well as reports and general encyclopedia data. It should be stressed that the working process on the business project will cover the analysis of the banking system about the economical development during the period of the global crisis; the inflation control adopted by Federal Reserve will allow assessing total productivity of the state economy. The effectiveness and sufficiency of the report are dependants on the visual supportive data, graphs, and charts, illustrating the connection between inflation and strategic activities worked out by the central Federal Reserve aimed at its control.


  1. Cook, R. (2007) . Web.
  2. Bernanke, B. (2005). The inflation-targeting debate. University of Chicago Press.
  3. Rapid trends – Gold and Silver Bullion. (n.d.) Word Press.
  4. Solow, R. and Taylor, J. (1999). Inflation, Unemployment, and Monetary Policy. MIT Press.
  5. White, L. (1982). . Web.
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