Fifth Grade
Worksheets
The Fed's Balancing Act
The Federal Reserve System is the government's banking system. The Fed does many things. Its most important job, however, is to control the amount of money that is in circulation. This is a tough task! When there is a lot of money circulating, people tend to spend more. The more people spend, the more businesses grow. The more businesses grow, the more jobs they create. This is a good thing!
When too much money is circulating, however, companies cannot keep up with the demand for their products. They do not have the supply necessary to meet the consumers' demands. People want to purchase more goods than can be produced. This causes prices to rise. These higher prices often discourage customers from spending money and cause the once booming markets to slow down. People tend to save their money when there is not enough circulating. They are very cautious about spending their hard-earned dollars. When customers stop spending, businesses stop growing. Companies can't create new jobs if their businesses aren't growing. They cannot hire additional employees because they don't have any work for them to do.
