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GDP, unemployment, inflation, and interest rates

I need help understanding the following MBA macroeconomic problems:
A)What are the tools used by the Federal Reserve to control the money supply?
B)How do these tools influence the money supply, and in turn, affect macroeconomic factors?
C)Explain how money is created.
D)Which combinations of monetary policy help you to best achieve a balance between economic growth, low inflation, and a reasonable rate of unemployment?

Ideally, the help you provide will grow my understanding of these concepts and will help me more effectively discuss monetary policy and its effects on macroeconomic factors such as GDP, unemployment, inflation, and interest rates.

Solution Preview

Monetary policy and its effects on macroeconomic factors such as GDP, unemployment, inflation, and interest rates.
I need help understanding the following MBA macroeconomic problems:

A) What are the tools used by the Federal Reserve to control the money supply?

The term "monetary policy" refers to the actions undertaken by a central bank, such as the Federal Reserve, to influence the availability and cost of money and credit to help promote national economic goals. The Federal Reserve Act of 1913 gave the Federal Reserve responsibility for setting monetary policy.

The Federal Reserve controls the three tools of monetary policy--open market operations, the discount rate, and reserve requirements. The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements, and the Federal Open Market Committee is responsible for open market operations. Using the three tools, the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate.
The Federal Reserve System is a quasi-governmental banking system. Its composition is as follows:
(1) Presidentially-appointed Board of Governors of the Federal Reserve System in Washington, D.C.
(2) The Federal Open Market Committee;
(3) 12 regional Federal Reserve Banks located in major cities throughout the nation; and (4) numerous private member banks, which own varying amounts of stock in the regional
Federal Reserve Banks.

(Wikipedia)

The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.

Changes in the federal funds rate trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and, ultimately, a range of economic variables, including employment, output, and prices of goods and services.

The central bank influences interest rates by expanding or contracting base money, which consists of currency in circulation and banks' reserves on deposit at the central bank. The primary ways that the central bank can affect base money is by open market operations or sales and purchases of second hand government debt, or by changing the reserve requirements. If the central bank wishes to lower interest rates, it purchases government debt, thereby increasing the amount of cash in circulation or crediting banks' reserve accounts. Alternatively, it can lower the interest rate on discounts or overdrafts (basically loans to banks secured by ...

Solution Summary

Monetary policy and its effects on macroeconomic factors is emphasized.

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