Please use your own experiences and the knowledge you have gained from this week’s readings to answer the following topics and questions. You may also use information that you find in the textbook, AIU’s library, or the Internet to support your discussion. Make sure that you use economic concepts in your main contribution.
The Federal Reserve (the Fed) is responsible for managing the United States’ money supply. Monetary policy affects the whole economy through interest rates. When the Fed increases the money supply, interest rates drop. When the Fed decreases the money supply, interest rates increase. This week, you will discuss how you are affected by the Federal Reserve’s monetary policies. In your discussion, please consider the following questions:
Think about a recent purchase you made that required a loan, such as a house or a new car.
Explain how you arrived at the decision to purchase that item.
Then, explain how the interest rate on the loan affected your purchase. For instance, were you able to purchase a higher priced item because the interest rate was low?
Thinking deeper about your answers, how do interest rates affect millions of other buyers and their decisions, and how does that affect the whole economy? Explain.