Submitted by altdog on June 7, 2007

• Category: Business
• Words: 1561
• Pages: 7
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Macroeconomic Impact On Business Operations

The monetary policy “is made by the Federal Open Market Committee, which consists of the Board of Governors of the Federal Reserve System and the Reserve Bank President” (frbsf.org). This policy has two basic goals which are to promote maximum sustainable output and employment and to promote stable prices. Within this policy there are tools the Federal Reserve (Fed) can use to control the money supply. One example would be by specifying what reserves deposit-taking institutions must set aside either as currency in their vaults or as deposits at their regional Reserve Banks. Raising reserve requirements forces banks to withhold a larger portion of funds, thereby reducing the money supply,...

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