Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Term Paper:
Likewise this cycle of purchases can be broken with a tightening of the money supply, having a negative impact on the GDP.
Unemployment is affected as well. As money supply is loosened, businesses are encouraged to expand. Capital is more readily available to finance expansion, and a growing GDP further encourages this expansion by providing more money in the market to purchase the new goods or services that the expansion creates. Some of this investment will generate new jobs, lowering unemployment. Conversely, a tightening of the money supply will discourage the creation of new jobs.
2a) Money is created in three ways. First, open-market operations create money. When the Fed buys securities from the banks, it does not pay for them. Instead, it creates a credit on the balance sheet. This credit then enters the economy when the bank subsequently lends it. Open market operations are conducted with the objective of influencing the federal funds rate.
Essentially, the Federal Reserve either purchases or sells U.S. government securities. These transactions are conducted on the open market in a competitive environment, hence the term "open-market operations."
These securities can be issued by the U.S. Treasury, Federal agencies and government-sponsored enterprises.
A second way the Fed can create money is simply by printing more. This tool is not commonly used to influence monetary policy, as the amount of physical money is only a small proportion of total money supply. Printed money supply is generally based more on the demand for the physical version of money than the need to create more money in the economy. Based on this demand, the Fed either issues currency to the banks or takes in currency from the banks.
2b) One of the Fed's main roles is to achieve price stability. This is because inflation reduces the value of money, which in turn has a negative impact on the economy. The need to keep inflation in check must be balanced against the need to encourage economic growth, which in turn provides a reasonable level of unemployment. The goal of the Fed is to strike a balance between these factors. If the money supply is loosened too much, inflation will rise and the value of money will decrease. If the money supply is too tight, inflation will not be an issue but the economy will falter due to lack of investment, and this will result in an increase in unemployment.
In terms of preferred monetary policy, the Fed is partial to open-market operations. Over time they have used various means as their primary tool for managing money supply, but open-market operations have the advantage of dealing in a competitive market with a variety of private dealers, which makes this option is the most flexible.
The Fed has what is known as the Open Market Committee (FOMC), and they meet every six weeks to determine the overnight rate. This method is closely related to the open-market operations, which are conducted with an eye to influencing the overnight rate. The announcement of the overnight rate, however, has the benefit of being visible to the public at large. The treasury activity that seeks to guide the overnight rate is not so easily interpretable as the announcement of the overnight rate. The rate announcement sends a loud and public signal of Federal Reserve policy to the nation and the world. This makes it a highly effective communication tool in that it reaches a far wider audience of business leaders and investors than do the open-market operations.
This combination of monetary policies allows the Fed to frequently and regularly not only make shifts in money supply but to communicate those shifts to the nation. This allows for a more rapid market reaction to the shifts, which in turn allows for the desired affects of the policy to spread more quickly. This allows the Fed to keep up with changes in the economy, inflation and the unemployment rate.
Schwartz, Anna J. Money Supply. The Concise Encyclopedia of Economics. Online at http://www.econlib.org/library/Enc/MoneySupply.html. Accessed April 3, 2008.
Johnson, Manuel. The Federal Reserve System. The Concise Encyclopedia of Economic. Online at http://www.econlib.org/LIBRARY/Enc/FederalReserveSystem.html. Accessed April 3, 2008.
Coghill, Carrie. November 2005. Impact of the Federal Reserve System. Physician's News Digest. Online at http://www.physiciansnews.com/finance/1105.html. Accessed April 3, 2008[continue]
"Macroeconomic Impact On Business Operations" (2008, April 03) Retrieved October 22, 2016, from http://www.paperdue.com/essay/macroeconomic-impact-on-business-operations-30994
"Macroeconomic Impact On Business Operations" 03 April 2008. Web.22 October. 2016. <http://www.paperdue.com/essay/macroeconomic-impact-on-business-operations-30994>
"Macroeconomic Impact On Business Operations", 03 April 2008, Accessed.22 October. 2016, http://www.paperdue.com/essay/macroeconomic-impact-on-business-operations-30994
Macroeconomic Impact on Business Operations Monetary and fiscal tools are used by the government to control economic conditions in the country. Monetary policy usually targets money supply in the market in order to control inflation. In some countries such as Russia and Brazil, governments may often force the mints to print extra currency to meet various expenses. This results in higher flow of money in the market which is unsubstantiated by
In practice, TESOL is often used as synonymous with TESL or TEFL, where the acronyms stand for Teaching English as a Second Language and Teaching English as a Foreign Language. TESOL has however become more popular than these two concepts since its focus is that of language development for the students, without the differentiation of the English language as a second language or as a language taught to people
Annual Report What differences, if any, do you perceive in the approach each organization presents in its annual performance? Is information and data presented clearly so that the reader can make clear inferences about how the organization performed? I believe the two organizations, Bank of America, and JP Morgan format their annual reports to reflect the culture of the business. Bank of America, due primarily to the negative sentiments prevailing in the
For example, Mavis will be able to provide white linen assortments in the Miami, Florida area while eliminating the offering altogether in its Gainesville, Florida store. This allows the strategy to mitigate gaps in communication or overall service. Finally, the Bullwhip effect leads to many financial costs which are both tangible and intangible (Mason-Jones, 2000). Those in the supply chain must deal with the ramifications of poor customer service,
2009 2008 ART 8.54 8.84 ACP 42.74 41.27 Iturnover 15.13 14.23 Inventory Age 24.12 25.65 Comments: Ford shows unfavorable activity ratios, which is indicative of the fact that the company is using its assets efficiently to meet financial requirements. All measures, except ART improved over time (from 2008 to 2009). 2009 2008 Debt/Equity 2.04 1.62 Debt/Assets 0.40 0.36 TIE -2.35 2.25 Comments: Ford uses debt heavily to finance the growth of the company. Overall the company is servicing the debt well and is stable over time, even though the loss in 2009 has affected the capital
Macroeconomic Analysis Economically, recession is described as a significant drop in economic activity over a short period of time usually a few months (bbc news, 2008). Gross Domestic Product (GDP), household income and other macro-economic indicators drop while others such as unemployment and bankruptcy rises. Recession can be caused by many factors e.g an external trade shock or the burst of an economic bubble such as the United States housing bubble.
Business Regulation of Mergers and Implications of Government Intervention - the Case of a Potential Merger for Blockbuster When a large firm in a mature industry wants to grow a common strategy will be the seeking of an acquisition or merger. However, large firms in an industry will often be faced with government regulation which may seek to control and limit the way merger activity takes place. For example, if Blockbuster, a