FREE ESSAY ON U.S. MONETARY POLICY

U.S. MONETARY POLICY

U.S. monetary policy affects all kinds of economic and financial decisions people make in
this country-whether to get a loan to buy a new house or car or to start up a company,
whether to expand a business by investing in a new plant or equipment, and whether to put
savings in a bank, in bonds, or in the stock market, for example. Furthermore, because
the U.S. is the largest economy in the world, its monetary policy also has significant
economic and financial effects on other countries. 
The object of monetary policy is to influence the performance of the economy as reflected
in such factors as inflation, economic output, and employment. It works by affecting
demand across the economy-that is, people's and firms' willingness to spend on goods and
services. 
While most people are familiar with the fiscal policy tools that affect demand-such as
taxes and government spending-many are less familiar with monetary policy and its tools.
Monetary policy is conducted by the Federal Reserve System, the nation's central bank,
and it influences demand mainly by raising and lowering short-term interest rates. 
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