Macroeconomics

"Macroeconomics is a branch of economics that deals with the performance, structure, and behavior of a national economy as a whole. Macroeconomists seek to understand the determinants of aggregate trends in an economy with particular focus on national income, unemployment, inflation, investment, and international trade" (Wikipedia, 2007). Government tends to use a combination of both monetary and fiscal options when setting policies that deal with the Macroeconomic.

According to McConnell & Brue (2004), governments make adjustments through policy changes which they hope will succeed in stabilizing the economy. Governments believe that the success of these adjustments is necessary to maintain stability and continue growth. The stabilization of the economy requires (1) Appropriate fiscal policy which consists of deliberate changes in government spending tax collections designed to achieve full employment, control inflation, and encourage economic growth. (2) Intelligent management of regulation of the money supply (monetary policy). This paper is primarily focus on the monetary system in Macroeconomic and the paper will identified the tools that used by the Federal Reserve to control the money supply, Macroeconomic Factors, and the monetary policy combinations that best achieve a balance between economic growth, low inflation, and a reasonable rate of unemployment.

How money is created and what is the Money Supply?

According to Schwartz (2002), the definition of money has varied, most commonly silver or gold, served as money. Later when paper money a...

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Schwartz, A. (2002). The Library of Economics and Liberty-Money Supply. Retrieved October 12, 2007, from http://www.econlib.org/library/Enc/MoneySupply.html

Hewitt, M. (2007). Dollar Dare-Composition of the U.S. Money Supply. Retrieved October 13, 2007, from http://www.dollardaze.org/blog/?p=215

McConnell, C. & Brue, S. (2004). Economics: principles, problems, and policies. [University of Phoenix Custom Edition e-Text]. New York: McGraw-Hill Irwin. Retrieved October 13, 2007, from University of Phoenix, rEsource, Forces Influencing Business in the 21st Century Web site.

Obringer, L. (2007). How stuff works-How the Fed Works. Retrieve October 14, 2007, from http://money.howstuffworks.com/fed10.htm