Monetary Policy

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Monetary Policy Monetary Policy The Economy is the backbone to society. There are many factors that operate in, and govern our society’s economical structure. Factors such as scarcity and choice, opportunity cost, marginal analysis, microeconomics, macroeconomics, factors of production, production possibilities, law of increasing opportunity cost, economic systems, circular flow model, money, and economic costs and profits all contribute to what is known as the economy. These properties as well as a few others, work together to influence the economy. Microeconomics and Macroeconomics are two major components. Both of these are broken down into several different components that dictate societal norms and views. “Microeconomics and macroeconomics can be described in terms of small-scale vs. large-scale or in terms of partial vs. general equilibrium. Perhaps the most important distinction, however, is in terms of the role of equilibrium. While issues in microeconomics seldom challenge the notion of a naturally occurring equilibrium, the existence of business cycles and, especially, unemployment suggests too many observers that macroeconomics raises issues of a different character.” (McConnell & Brue, 2004). In the study of macroeconomics there are several sub factors that affect the economy either favorably or adversely. One dynamic of macroeconomics is monetary policy. Monetary policy consists of deliberate changes in the money supply to influence interest rates and thus the level of spending in the economy. “The goal of a monetary policy is to achieve and maintain price level stability, full employment and economic growth.” (McConnell & Brue, 2004). Monetary Policy What is Monetary Policy? “Monetary... ... middle of paper ... ...l Reserve, 2008). The economy is an ever changing organism that acts and reacts according to the stimulus of various factors and the consumers. References Federal Reserve. (2008). FRB: Monetary Policy Report to the Congress. Retrieved July 4, 2008, from Federal Reserve Bank of San Francisco. (2007). U.S. Monetary Policy. Retrieved July 3, 2008,from McConnell, Campbell R., & Brue, Stanley L. (2004). Economics: Principles, Problems and Policies 16e. [University of Phoenix Custom Edition e-text., : McGraw-Hill Companies. Retrieved July 4, 2008, from University of Phoenix, MMPBL-501 Web site. University of Phoenix . ( 2008). Economics for Managerial Decision Making [Computer Software]. Retrieved July 3, 2008, from University of Phoenix, Simulation, MMPBL-501 Web site

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