Microeconomics Impact on Business Operations
University of Phoenix
Joe M. Fears
Sept 1, 2008
Understanding the macroeconomic impact on business operation requires a good understanding of monetary policy required. The monetary policy is a process in which the government, central bank or monetary authority of a country controls the supply of money, availability of money and rate of interest in order to attain a set objectives oriented towards the growth and stability of the economy thus directly having an affect in inflation, employment and therefore, the Gross Domestic Product (GDP). This purpose of this paper is to the main objectives of monetary policy and its influence on performance of the overall economy. As a society, people are faced with financial decision making on the daily basis, the range of financial decisions covers small scale business decision such as the purchase of a home computer or large scale such as a purchase of a home. The circumstances also can also vary from investing in an existing business or to investing in a company stock and bonds purchase plan the monetary policy plays the main role in our financial decisions. As the goal of monetary policy is to achieve and maintained price-level stability, full employment and economic growth (McCornnell and Brue, 2004), it directly affects consumers to certain extend during the processes of applying for a load for the purchase of a home, business improvements or any other financial investment. The monetary policy of the United States is the key to macroeconomics factors such as GDP, unemployment, inflation and interest rates. Although the government has various options it can go with in order to control the economy the way it sees fit including budget cuts, and selling and buying its own bonds (Samullah, 2008).
The monetary policy falls under the control of the Federal Reserve System, the purpose and function can be summarized as follows: