How does the Federal Reserve control the supply of money?
Today, the Fed uses its tools to control the supply of money to help stabilize the economy. When the economy is slumping, the Fed increases the supply of money to spur growth. Conversely, when inflation is threatening, the Fed reduces the risk by shrinking the supply.
How can the federal deficit be lowered?
For the federal deficit to be lowered, A) the federal government must decrease its spending and increase net exports. B) the federal government'ʹs expenditures must be lower than its tax revenue.
What tools does the Fed use to increase the money supply?
The Fed uses three main tools to accomplish this: A change in reserve ratio is seldom used, but is potentially very powerful. The reserve ratio is the percentage of reserves a bank is required to hold against deposits. A decrease in the ratio allows the bank to lend more, thus increasing the money supply.
How are federal programs funded?
The method for funding federal programs can seem extremely convoluted to the casual observer. It references jargon unique not just to Congress, but to budget and appropriations procedures as well. The process is expected to follow a rigid calendar and series of procedures, but those deadlines and procedures are rarely followed.
When does an allotment of pay take effect?
Except when a later date is agreed upon, an allotment of pay will take effect with the paycheck issued for the first pay period that begins on or after the servicing personnel office has received the properly completed allotment form.
How many savings allotments can an employee have?
Under 31 U.S.C. § 209, an employee within the continental U.S. may not have more than two savings allotments. An employee assigned to a post of duty outside the continental U.S. may not have more than one savings allotment.
What is dues withholding in labor?
Dues to Labor Organizations. To make an allotment for dues, an employee must be a member of a labor organization which is the exclusive representative for the bargaining unit and has a dues withholding agreement with the appropriate bureau or operating Unit of the Department. The labor organization is responsible for providing allotment forms ...
Can an employee make an allotment?
An allotment may not be made by an employee whose earnings are not regularly sufficient to cover the amount of the allotment. An authorized allotment will not be withheld when net salary in any particular pay period is not sufficient to cover the amount of all allotments in effect.
What is the other category of federal funding?
The other category of funding is known as “discretionary spending.”. Nearly all federal funding that reaches colleges and universities comes through discretionary programs, though the largest student aid program, Pell Grants, combines both mandatory and discretionary funding streams.
Who prepares the budget proposal?
It is prepared by the Office of Management and Budget (OMB), which functions as the chief administrative agency of the Office of the President. The OMB scores the program funding and policy changes detailed in the budget request. It is important to remember that the president’s budget proposal is simply a request.
What is discretionary funding?
Discretionary-funded programs have annual allocations that set the total level of funding they can provide within that fiscal year. A final category of funding of interest to campuses is federal student loans.
How many votes do you need to override a veto?
As with more traditional legislation, the president has the authority to veto appropriations bills, and Congress can then attempt to override the veto. A two-thirds vote is required in both chambers to overturn a veto. Section 5 Content Left. Section 5 Content Right.
What is a budget resolution?
The budget resolution is both similar to and different from traditional legislation. Like a legislative bill, budget resolutions originate in the relevant committee (in this case, the respective budget committees of each chamber) and must be approved by the whole chamber.
How do federal student loans work?
In this way, federal student loans work somewhat like an entitlement program in that the government does not set an annual loan amount to provide, and the terms of the loans and students’ ability to borrow are set in law. The funding process is an annual event.
When does the funding process begin?
Congress is tasked with producing a budget resolution and 12 appropriations bills for each federal fiscal year, which begins on October 1. Other funding legislation, such as emergency funding in response to a natural disaster, frequently occurs outside of the standard process.
The Evolution of The Federal Reserve
Reserve Ratio
- A change in the reserve ratio is seldom used but is potentially very powerful. The reserve ratio is the percentage of reserves a bank is required to hold against deposits. A decrease in the ratio allows the bank to lend more, thus increasing the money supply. An increase in the ratio has the opposite effect.2
Discount Rate
- The discount rate is the interest rate the Fed charges commercial banks that need to borrow additional reserves. The Fed sets this rate, not a market rate. Much of its importance stems from the signal the Fed sends when raising or lowering the rate: if it's low, the Fed wants to encourage spending and vice versa.3 As a result, short-term market interest rates tend to follow the discou…
Open Market Operations
- Open market operations consist of buying and selling government securities by the Fed. If the Fed buys back securities (such as Treasury bills) from large banks and securities dealers, it increases the money supply in the hands of the public. Conversely, the money supply decreases when the Fed sells a security. The terms "purchase" and "sell" refer to actions of the Fed, not the public.4 F…
The Bottom Line
- Today, the Fed uses its tools to control the supply of money to help stabilize the economy. When the economy is slumping, the Fed increases the supply of money to spur growth. Conversely, when inflationis threatening, the Fed reduces the risk by shrinking the supply. While the Fed's mission as a "lender of last resort" is still important, the Fed's...
Definitions
- "Allotee" means the person or institution to whom an allotment is made payable. "Allotment" means a recurring specified deduction for a legal purpose from pay authorized by an employee to be disbursed on a pay period basis to an allotee. "Continental U.S." means the contiguous states excluding Hawaii and Alaska. "Discretionary allotments" means a r...
Authorized Allotments
- Subject to the considerations outlined below, employees may make allotments of pay for: 1. Dues to a labor organization 2. Dues to an association of management officials and/or supervisors 3. Dues to a foreign affairs agency organization 4. Income tax withholdings 5. Savings 6. Child support or alimony payments 7. Charitable contributions to a Combined Federal Campaign 8. Re…
Number of Allotments
- Under 31 U.S.C. § 209, an employee within the continental U.S. may not have more than two savings allotments. An employee assigned to a post of duty outside the continental U.S. may not have more than one savings allotment.
Dues to Labor Organizations
- To make an allotment for dues, an employee must be a member of a labor organization which is the exclusive representative for the bargaining unit and has a dues withholding agreement with the appropriate bureau or operating Unit of the Department. The labor organization is responsible for providing allotment forms and explaining provisions for canceling allotments.
Sufficiency of Funds
- An allotment may not be made by an employee whose earnings are not regularly sufficient to cover the amount of the allotment. An authorized allotment will not be withheld when net salary in any particular pay period is not sufficient to cover the amount of all allotments in effect. Neither will the agency make adjustments to compensate for allotments missed due to insufficiency of f…
Effective Date
- Except when a later date is agreed upon, an allotment of pay will take effect with the paycheck issued for the first pay period that begins on or after the servicing personnel office has received the properly completed allotment form.
Discontinuance of An Allotment
- The bureau/Operating Unit will not be responsible for any amount overpaid to an allottee because the employee failed to give timely notice for discontinuance of an allotment. 31 U.S.C. § 3332, allotment of pay to a checking or savings account; 5 U.S.C. § 5525, allotments of pay, head of agency authority; 37 U.S.C. § 706, NOAA Corps allotments of pay; 5 U.S.C. §§ 7115 and 7135, all…