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Alaina Appleman
Macroeconomics
December 1, 2003
Macroeconomic Policies and Current Growth Rates
INTRODUCTION
All components on a macroeconomic level determine the fate of the current U. ... This paper explains the determinants of growth and decay in the U. ... economy and why they determine the rates of inflation, money supply, aggregate demand, etc. ... Governments use them in an attempt to maintain economic growth, high employment, and low inflation. Within the components of monetary and fiscal policy, these terms are explained in depth and tying in the end with inflation and deflation rates.
ECONOMIC GROWTH
The sub-par performance of the U. ... Although accommodative macroeconomic policies and continued robust productivity growth helped to sustain aggregate demand, businesses remained cautious about spending and hiring. ... In financial markets, longer-term interest rates fell, over the first half of the year as the decline in inflation and the subdued performance of the economy led market participants to conclude that short-term interest rates would be lower than previously anticipated. These lower interest rates helped to sustain a rally in equity prices. ... It influences savings, investment, and growth in the long run, and aggregate demand for goods and services in the short run. ...
To determine its fiscal policy, a government must make judgments about a number of factors, including the level of economic growth or unemployment likely in the future. ...
MONETARY POLICY
Monetary policy is the regulation of the money supply and interest rates by a central bank, such as the U. ... If growth is slowing, the Fed can reverse the process by increasing the money supply, lowering the reserve requirement and decreasing the discount rate. ... Changes in the federal funds rate trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and ultimately a range of economic variables, including employment, output, and prices of goods and services.
Approximate Word count = 1392
Approximate Pages = 5.6
(250 words per page double spaced)
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