The Digital Economy

The Digital Economy

Comp 2/Module 3 – Reflection

Assignment Content

Write a response to the following in a minimum of 500 words:

Analyze how changes in the Federal Reserve’s monetary policy affect at least 2 of the 4 components of GDP (consumption, investment, government spending, net exports).

Answer preview

The Federal Reserve the various tools of monetary policies to control the supply of money in the economy. These approaches are used to regulate inflation, employment, and economic stability. Whether expansionary or contractionary, monetary policies are applied to create an optimum sustainable output in the economy. The government uses open market operations, discount rates, and interest rates to determine the number of funds in the banking system for lending and borrowing

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