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Macroeconomic Impact on Business Operations
"Money, get away. Get a good job with good pay and you're okay. Money, it's a gas.
Grab that cash with both hands and make a stash. New car, caviar, four star daydream, Think I'll buy me a football team." This is the first verse of Pink Floyd's song, Money. It informs us that by having a good job and increasing one's wealth one can purchase a new car, enjoy fine dining or even purchase a soccer team. Hearing the lyrics to the song, a small child asked, "Where does money come from? Dad says, ?It does not grow on trees?'"
The easy answer to the child's question is one works for it. However, the literal answer is much more complex. One must look at macroeconomics and its exploration of trends in the nation economy as a whole considering an aggregate of economic factors. To answer the question one must defined the creation of money, identify any tools used to control the money supply, and explain the influence of the tools on that supply and any macroeconomic factors. In understating these concepts, one can recommend a monetary policy that best achieves a balance between economic growth, low inflation, and unemployment.
What is Money?
Some view money simply as a tool used to facilitate transactions. If that was the case, only things readily accepted in exchange for goods, services and other assets need to be considered. Many things ? shells, stones ? have served this function. In the United States, money used in transactions is of three kinds ? currency (paper money and coins); demand deposits (non-interest bearing checking accounts in banks); and other checkable deposits at all depository institutions. However, only the cash and balance held by t ...