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Submitted by gknw07 on November 5, 2007
- Category: Business
- Words: 1431
- Pages: 6
- Views: 101
- Popularity Rank: 1298
Mba520
There are three macro-economic indicators which the federal government uses to make and implement economic policies: Real Gross Domestic Product (Real GDP), the Inflation Rate, and the Unemployment Rate. The GDP can increase with an increased money supply. More money in the system means possible spikes in both investment and consumer demand. This will result in the Real GDP increasing. The reverse is also true: Any action that drains money out of the system decreases Real GDP. The inflation rate will increase with the influx of money into the system. (Chapter 7 - McConnell & Brue)
When the amount of money increases in the system the actual value of the money remains the same, but,...
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