The adjustment in the supply of money is one of the tools used by the Federal Reserve to influence the economy by influencing interest rates. This assignment covers the mechanics of the money supply and how it influences interest rates. A thorough understanding of this concept will help you better understand how Federal Reserve policies may impact your business or organization.

Upon successful completion of this discussion, you will be able to:

Evaluate the tools the Federal Reserve uses to change the money supply and interest rates.

Resources

Text: Economics for Managers

Article: Federal Reserve

Background Information

In order to fully understand this assignment you must understand the functions of money $1)$ as a medium of exchange, $2)$ as a unit of account, and $3)$ as a store of value. Pages $362363$ in the textbook provide a definition and example of each of these functions for money and the ways the Federal Reserve measures the money supply.

Instructions

Review the rubric to make sure you understand the criteria for earning your grade.

Review the article Federal Reserve and answer the following:

What are the three major tools the Federal Reserve uses to affect interest rates and aggregate demand in the economy? Explain each major tool.

Which tool dominates the Federal Reserve's monetary policy today? How effective is this tool relative to desired outcomes in the economy?

Are today's monetary policies in sync with the Federal Government's fiscal policies? Why or why not?

How do the Federal Reserve's interest rates affect you and your family? Explain.

Y

follow these rules$-$

You demonstrated clear, insightful critical thinking and provided a detailed explanation of the three tools that the Federal Reserve uses to change the money supply and interest rates in the economy and why they operate as they do$.$ You also provided a detailed evaluation of which of these tools is the most important and why.

Your assignment length is correct with sources correctly cited.

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