Eco Discussion

docx

School

Strayer University *

*We aren’t endorsed by this school

Course

STRATEGIC

Subject

Economics

Date

Nov 24, 2024

Type

docx

Pages

Uploaded by vcnkemb97

1 4-2 Eco Discussion Student’s Name Course Name Instructor Date

2 Changes made to the federal funds rate can directly influence the unemployment rate. A decrease in the federal funds rate incentivizes borrowing and spending, potentially resulting in heightened demand for labor, ultimately leading to a decline in unemployment and an increase in employment. Changes to the federal funds rate, the interest rate at which depository institutions lend funds to each other overnight, can impact the unemployment rate. The Fed can change the federal funds rate to encourage or discourage spending. When the Federal Reserve lowers the federal funds rate, banks pay less to borrow money, reducing the interest rates charged on loans to consumers and companies. Since interest on loans has dropped, firms have more money for growth projects and new hires. Federal funds rate cuts have the potential to boost economic growth, which in turn would reduce the unemployment rate. When the Fed raises the federal funds rate, banks face higher borrowing costs, increasing interest rates charged on loans. A rise in interest rates has a chilling effect on corporate spending, growth, and employment. A rising federal funds rate could reduce economic activity, raising unemployment. Inflation may be affected by the federal funds rate because of its effect on aggregate demand. The Federal Reserve often reduces the federal funds rate to enhance aggregate demand. The impact of this increased demand on prices is possible inflation. However, if the Federal Reserve increases the federal funds rate, consumers and businesses are less likely to borrow and spend, resulting in lower aggregate demand. When demand drops, it might ease the upward pressure on prices, eventually reducing inflation rates. The federal funds rate has a complicated and potentially impacted connection with the unemployment and inflation rates.

3 References How does the Federal Reserve affect inflation and employment? ( 2020, August 27). The Fed. https://www.federalreserve.gov/faqs/money_12856.htm

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Related Documents

50.docx

image (59).png

Order #920727.docx

Economics.edited (1).edited.docx

Touchstone ppt.pptx

econ001-Examstyle-Q5.PNG

dis.docx

23.docx

fall14q1.pdf

Screenshot 2023-09-06 145006.png

Economics_Introduction to economics_03_MC_03_279_SPI.docx

ECS2602.docx.doc_NOTES.docx

Recommended textbooks for you

Survey Of Economics

Economics

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Cengage,

Economics:

Economics

ISBN:9781285859460

Author:BOYES, William

Publisher:Cengage Learning

MACROECONOMICS FOR TODAY

Economics

ISBN:9781337613057

Author:Tucker

Publisher:CENGAGE L

Economics For Today

Economics

ISBN:9781337613040

Author:Tucker

Publisher:Cengage Learning

Economics Today and Tomorrow, Student Edition

Economics

ISBN:9780078747663

Author:McGraw-Hill

Publisher:Glencoe/McGraw-Hill School Pub Co

Essentials of Economics (MindTap Course List)

Economics

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:Cengage Learning

SEE MORE TEXTBOOKS

Recommended textbooks for you

Survey Of Economics
Economics
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Cengage,
Economics:
Economics
ISBN:9781285859460
Author:BOYES, William
Publisher:Cengage Learning
MACROECONOMICS FOR TODAY
Economics
ISBN:9781337613057
Author:Tucker
Publisher:CENGAGE L
Economics For Today
Economics
ISBN:9781337613040
Author:Tucker
Publisher:Cengage Learning
Economics Today and Tomorrow, Student Edition
Economics
ISBN:9780078747663
Author:McGraw-Hill
Publisher:Glencoe/McGraw-Hill School Pub Co
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning