Macroeconomic Impact on Business Operations Free Essay, Term Paper and Book Report
Macroeconomic Impact on Business Operations
In todays society, several macroeconomic factors take part in the impact on business operations. As the economy goes through its business cycles, important measures are taken to keep these factors stabilized and at a level beneficial to the economy. The Federal Reserve achieves this by conducting monetary policy that controls the money supply in order to influence interest rates and thus the total level of spending in the economy. Specifically, the goal is to achieve and maintain price-level stability, full employment, and economic growth (McConnell & Brue, 2004).
How Money is Created
Before discussing how money supply is controlled, it must be understood how money is created. The United States has a fractional reserve banking system in which only a fraction of the total money supply is held in reserve as currency. All commercial banks that provide checkable deposits must by law keep required reserves that are equal to a specified percentage, or required reserve ratio, of the banks own deposit liabilities. A bank will also have exces......
Word Count: 1492
Page Count: 5.9 (250 words a page / double spaced)
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