MBA 820 - Reflections on Module 3

Answer the following question in your learning journal to stimulate your thinking. Your response should demonstrate reflective thought.

How does the Fed impact your daily life? Use the tools and theories in this module to support your answer.
Note: If you need more support in your reflection, do a general Internet search on Yahoo! or Google with the key words "Fed Actions", "Fed Policy", or "Fed Interest Rates".

The fed impact our daily in various ways. The main way is their effect on the money supply and interest rates. Expansionary economy's fuel company expansions and consumer spending. This will lead to lower unemployment, but the potential for inflation creeps in the picture. Additionally, since a large majority of people's retirement is in the equity market as well as the bond market - the fed's policies directly affect the stock market. The performance of mutual funds and/or individual stocks directly effects the consumer's confidence in the economy and thus their spending habits. This is mainly control by the fed's use of open market operations. The discount rate and reserve requirement ratio have an affect as well, but not as much as the open market operations. The fed's actions or inactions to global movements in the financial market also effect us. The monetary polices of the fed directly effect the currency rates of the dollar relative to other currencies, all things staying equal.

The way the fed's approach, Keynesian or Monetarist, also effect the markets, interest rates, and comsumer confidence in the eonomy. Unemployment and inflation will always be present, so a combination of these two approaches needs to used in order to stabilze the economy. They must also, as previously mentioned, pay attention to the monetary policies of other countries and then understand their motives.