Monetary Policy
United States' monetary policy affects many economic and financial decisions people make in this country. For example, whether to get a loan to buy a new house or car to start up a company, and whether to put savings in a bank, in bonds, or in the stock market. Since the United States is the primary economy in the world, its monetary policy also has major economic and financial effects on other countries. The purpose of monetary policy is to manipulate the performance of the economy in such factors as inflation, economic output, and employment. It works by affecting demand across the economy, meaning people and firms' willingness to spend on goods and services. Furthermore, the Federal Reserve System, which is the nation's central bank, conducts monetary policy, it influences demand mainly by raising and lowering short-term interest rates.
While most people are familiar with the fiscal policy tools that affect demand, such as taxes and government spending, many are less familiar......
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