Krugman's Economics For The Ap® Course
3rd Edition
ISBN: 9781319113278
Author: David Anderson, Margaret Ray
Publisher: Worth Publishers
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Question
Chapter 26, Problem 1MCQ
To determine
The reason behind the creation of the Federal Reserve system.
Expert Solution & Answer
Explanation of Solution
The core reason behind the creation of the Federal Reserve System was the bank panic of 1907. The earliest of many major economic disasters to hit the globe in the 20th century was the global bank panic of 1907. It not only changed a recession into a contraction, but it also sparked a push for monetary change. The American financial system has seen significant changes since the Federal Reserve System was established.
The Fed's three principal functions were to function as a clearinghouse, as the country U’s government's fiscal agent, and also as a lender of final resort. The National Banking Legislation of 1864 had several issues that were made public by the Panic of 1907, foremost among them being the fact that not all banks were covered by the act.
Chapter 26 Solutions
Krugman's Economics For The Ap® Course
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