101 Things I Learned in Business School by Michael W Preis

Author:Michael W Preis [Preis, Michael W]
Language: eng
Format: epub
Tags: BUS012000
ISBN: 9780446569569
Publisher: Grand Central Publishing
Published: 2010-04-29T04:00:00+00:00

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The U.S. government has two primary tools for influencing the level of business activity.

Monetary policy is the province of the Federal Reserve System, the central banking system of the United States. The “Fed” has the ability to influence short-term interest rates and the money supply. Policies that reduce rates and/or increase the money supply make it less expensive for businesses to borrow and expand, but can increase inflation. The inverse is true as well.

Fiscal policy is the province of the Executive and Legislative branches. It refers to the rate, amount, and distribution of taxes and spending by the federal government. It takes longer to adjust than monetary policy.

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