Macroeconomic Impact On Business Operations Essay

1876 words - 8 pages

Macroeconomic Impact on Business Operations

This paper will discuss the objective of monetary policy and its influence on the performance of the economy as it relates to such factors as inflation, economic output, and employment. Monetary policy affects all kinds of economic and financial decisions people make in this country, whether to get a loan to buy a new house or car or to start up a company, whether to expand a business and whether to put savings in a bank, in bonds, or in the stock market. Furthermore, because the U.S. is the largest economy in the world, its monetary policy also has significant economic and financial effects on other countries. ...view middle of the document...

Lastly, the discount rate is the interest the Federal Reserve Banks charge on the loans they grant to commercial banks. Changes in the discount rate typically occur in conjunction with changes in the federal funds rate. Through the discount rate, Federal Reserve Banks lend funds to depository institutions. All depository institutions that maintain transaction accounts or non-personal deposits subject to reserve requirements are entitled to borrow at the discount rate. The Fed implements these tools to set the nation's monetary policy to promote the objectives of stable prices, moderate long-term interest rates, and maximum employment.
When prices are stable and believed likely to remain so, the prices of goods, services, materials, and labor are not distorted by inflation and therefore contribute to higher standards of living. Additionally, stable prices foster saving and capital formation, because when the risk of erosion of asset values resulting from inflation and the need to guard against such losses—are minimized, households are encouraged to save more and busi¬nesses are encouraged to invest more (Board, n.d.).
Beyond influencing the level of prices and the level of output in the near term, the Fed can contribute to financial stability and better economic performance by containing financial disruptions and pre¬venting their spread outside the financial sector. Modern financial systems are complicated and may be vulnerable to wide-scale systemic disruptions. The Fed enhances the financial system's resilience to these types of disruptions through regulatory policies geared at banking institutions and payment systems. If a threatening disturbance develops, the Fed also cushions the impact on financial markets and the economy by aggressively and visibly providing liquidity through open market operations or discount lending.
The Federal Open Market Committee (FOMC) exercises a great deal of control over the federal funds rate through its influence over the supply of and demand for balances at Federal Reserve Banks. The initial link in the chain between monetary policy and the economy is the market for balances held at the Federal Reserve Banks. The FOMC sets the federal funds rate at a level it believes will foster financial and monetary conditions consistent with achieving its monetary policy objectives, and it adjusts that target in line with evolving economic developments. A change in the federal funds rate, or even a change in expectations about the future level of the federal funds rate, can set off a chain of events that...

Other Papers Like Macroeconomic Impact On Business Operations

Corruptio and Its Impact on Growth, Business and Government Effectiveness

4290 words - 18 pages graph 2.3 we have visualized the negative impact of high corruption levels to the business operations in certain states. The equation drawn from the regression looks like: 19 The last regression aims to summarize the above analysis and emphasize on the seriousness of how corruption affects the social and political systems. 19 “y” – stands for “ease of doing business” rate 13 The below analysis shows the summarization of all

Essay on Business Operations Management

6009 words - 25 pages chance of surviving crashes and are also capable of COMMIT and ROLLBACK operations on transactions) 6. EXAMPLE 7. FEDERATED (It is a storage engine that accesses data in tables of remote databases rather than in local tables.) 8. ARCHIVE (The ARCHIVE storage engine is used for storing large amounts of data without indexes in a very small footprint. ) 9. CSV (The CSV storage engine stores data in text files using comma-separated values format

• Assess the Impact of Fiscal and Monetary Policy on Business Organisations and Their

2618 words - 11 pages the value of one currency against another. The exchange rate in itself is not considered to be a key macroeconomic objective, but needs to be considered due to its impact on other key aggregates. A change in exchange rate affects aggregate demand of Tesco. If a government wants to raise aggregate demand to reduce deflationary gap, it may try to reduce the exchange rate. This reduction would increase the price competitiveness of Tesco’s products

Impact Of Ict On Business - Internet & Www

302 words - 2 pages What is the difference between the Internet and the World Wide Web? First off all, the internet is a global infrastructure that connects networks to other networks; it is essentially a network of networks. The reasoning for connecting network to network is to allow computers to communicate with each other for the sharing of information and data across the world. Secondly, the World Wide Web (or ‘WWW’) is a tool used on top of the internet

Economic Factors

1494 words - 6 pages Factors: The business operation can be indirectly affected by both the macroeconomic and microeconomic factors. There are some things of the microeconomic factor that can have a large impact on business operations. The external environment can have a number of effects on the operation of a business and should be analyzed effectively. The macroeconomic factors determine market condition changes, and can help in reaching effective strategies to

Fairmodel Report

321 words - 2 pages Question #1: The Big One The U.S. Economy is impacted by many factors. Debates have been waged over various causes or potential results of macroeconomic changes in the components of the economy. Using the Fairmodel tool, we can use a comprehensive computer model to predict the impact of a “shock” to the economy. We can analyze the impact of this “shock” on overall Real GDP (Aggregate Expenditure) as well as the impact upon the individual

Economic Indicators & Post-Secondary Education

1823 words - 8 pages . Consumer Conference Board Consumer Confidence Survey Retrieved from Federal Student Aid Retrieved on 03/07/2015 from: Thomas, Christopher, S. Maurice. 2013. Managerial Economics, 11th Edition. McGraw-Hill Learning Solutions, 10/2016. VitalBook file. Thompson, Jr., Thomas, (2011) Economic Indicators and Their Impact on Business Decisions Financial

Supply and Demand

1013 words - 5 pages Macroeconomic can be very helpful in forecasting my business climate it can alert me to major changes and help me stay competitive, innovative and standout. Changes than can impact the local market and keep me ahead of other day care center can be very useful. In conclusion, the principles of microeconomic and macroeconomic play an important part in decision making in the business world. The simulation provided realistic examples of economic theories that we will face in the real world. It also touched on subjects we have studied in class so far only increasing my understanding of practical application in regards to economy.

Environmental Scanning

1757 words - 8 pages target markets. Dependable suppliers and strong supplier relationships strengthen a firm’s bargaining power and production reliability. Creditors are essential to any business, and the firm must be able to attract capable and innovative employees. Macroeconomic Forecast of Economic Indicators Macroeconomic forecasting can be beneficial to an organization with its strategic planning, but understanding the future of macroeconomic forecasting

Supply And Demand

915 words - 4 pages , it is more likely these changes will then impact the local market in which I am working. To conclude, both microeconomic and macroeconomic principles are very important to the decision making process of any business. The simulation this week provided real life examples for the economic theories in which we have studied this far. It also has increased my understanding of the practical application of economics in the real world.


2629 words - 11 pages characterizes the Indonesian business environment, granting several opportunities also to foreign multinational companies. But not only: if we look at the raw indicators, we can notice that this amazing rank depends mainly on the domestic market size, the foreign market size and the GDP, while exports are not very diffused in the Indonesian economy. The Macroeconomic environment allows Indonesia to rank 33rd with a score of 5.5; the macroeconomic

Related Essays

Impact On A Business Malaysia Essay

4390 words - 18 pages capability and high potential of multinational organizations, they thrived in establishing themselves in Malaysia by partnering with retail chains and distributors. Furthermore getting local and foreign celebrities to be their brand ambassadors have made a huge impact in capturing the market and getting people’s attention. The domestic or local brands hold their status and carry on business with reasonable pricing and with sense of patriotism whereas

Culture And Its Impact On International Business

5020 words - 21 pages Culture and its Impact on International Business Introduction As businesses have grown and expanded to the international level; certain aspects of business have become abundantly clear. One thing that has become the norm when doing business on the international level is dealing with different cultures. Culture, as defined by Geert Hofstede is “the collective programming of the human mind that distinguishes the members of one human group

Impact Of Globalisation On South African Business

2144 words - 9 pages SOUTH AFRICA ON THE FACE OF THE GLOBAL RECESSION South Africa was not spared by the global recession that gripped the global markets in 2009. The global economy remained firmly in the grips of a recession in the first quarter of 2009, South African markets correspondingly quaked as activity continued to decline at broadly the same pace that had been registered in the previous quarter. Driven by further sharp contractions in real output of

Impact Of Climate Change On Automotive Business

1027 words - 5 pages the use of fossil fuels. However, for automotive industry, climate change does not only provide opportunities but also threat to the business. It is a threat because about 12 percent of all manmade green house gas emission today is in cars and trucks of all makes on the road today, which means that the car produced in the last 20 decades are producing enormous number of Green House Gas and it is a threat for car maker company because these are