Macroeconomic Impact on
Business Operations

To control the supply of money in the United States the Federal Reserve uses three tools. The tools The Fed implements are Open Market Operations, The Reserve Ratio, and the Discount Rate. The three tools of monetary control each have distinct uses. This paper will define what the tools are, discuss how the three tools influence the money supply and macroeconomic factors, and a recommendation for monetary policy combinations that best achieve a balance between economic growth, low inflation, and a reasonable rate of unemployment.
Open Market Operations is defined as "The Fed's open-market operations consist of the buying of government bonds from, or the selling of government bonds to, commercial banks and the general public. Open-market operations are the Fed's most important instrument for influencing the money supply". (McConnell, Brue 2004.) Purchases and sales of U.S. Treasury and federal agency securities are the Federal......

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Title: Macroeconomic Impact
Approximate Word Count: 1451
Approximate Pages: 6 (250 words per double-spaced page)

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