Weekly Reflection
University of Phoenix
Principles of Macroeconomics

Weekly Reflection During the readings intended for this week’s objectives, we were able understand the true meaning of money and understand how it works. This has been very interesting to understand, as there are different points of views, not only the consumers. We have gotten to know what money is used for and how it works as consumers, but not necessarily the way banks gain from it and how the nations exchange it. For example, banks generate more money from giving money by charging for their services a percentage of the loan. This is known as the rate of interest, and it does play a part in the consumer market, as debtors will shop from bank to bank searching for the best rate. But then again, there’s the Federal Reserve or Fed, who will issue IOUs to the banks when they need to borrow money. We were able to discuss was how money is generated. There has to be a source for money, as its not something that just exists. In the United States, the Fed will issue the monetary policy which will influence the economy by making changes in the banking system. An example is the amount of money given out to the banks for them to loan. This amount is measured by the money multiplier effect, which measure the maximum amount of money the central bank will give the commercial bank. In a certain way, the money multiplier can be considered like the personal credit, where the central bank will consider this in order to offer them a maximum loan amount.

Apart from the readings, this week included interesting discussion questions based on monitory policies, the uses of money, the source of money, and the Fed. We also had a Team Assignment where we were able to use what we learned from last weeks learnings such as fiscal policies and the Keynesian and Classical models of economy. This