Macroeconomics Essay

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"Macroeconomics is a branch of economics that deals with the performance, structure, and behavior of a national economy as a whole. Macroeconomists seek to understand the determinants of aggregate trends in an economy with particular focus on national income, unemployment, inflation, investment, and international trade" (Wikipedia, 2007). Government tends to use a combination of both monetary and fiscal options when setting policies that deal with the Macroeconomic. According to McConnell & Brue (2004), governments make adjustments through policy changes which they…show more content…
dollars into gold at $35 per ounce, has made the U.S. and other countries' monies into fiat money-money that national monetary authorities have the power to issue without legal constraints. Money is used in all economic operations; money has a powerful effect every economic activity. The increase in supply of money put more money in the hands of the consumers and increased spending. When the money supply continues to expand and the prices begin to increase, particularly if the output growth reach to the capacity limits as the public begin to expect the inflation, lenders insist on higher interest rates to offset and expected decline in purchasing power over the life of their loans. Contradictory results happen when the supply of money falls, or when the rate of growth cries off. The U.S. money supply comprises currency-dollar bills and coins issued by the Federal Reserve System and the Treasury-and various kinds of deposits held by the public at commercial banks and other depository institutions such as savings and loans and credit unions. On June 30, 1990, the money supply, measured as the sum of currency and checking account deposits, totaled $809 billion. Including some types of savings deposits, the money supply totaled $3,272 billion. And even broader measure totaled $4,066 billion
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