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Week 3 Reflection

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Team A Week 3 Reflection
Sean Zart, Amanda Englert, Anaysa Santoyo, Melissa Love, Courtney Blood, and
Clinton Walker October 28, 2013
ECO/372 Principles of Macroeconomics
Kathleen Byrne
University of Phoenix Online

Team A Week 3 Reflection
Looking back on week three, the team discussed the role of the Federal Reserve and how they implement the U.S. monetary policies and how they work. The Contractionary and Expansionary policies are the one in the system that are used to control the amount of currency and the interest rates. We also learned how the money multiplier worked in order to effectively create money. We discussed how the Federal Reserve buys and sell bonds in order to add money into circulation or to take it out. We also discussed option two, the economic critique for our team assignment.

This week outlined Contractionary and expansionary monetary policy, which a few of us had a few problems with. However, after reading other classmates thoughts and ideas it made better since as to what it actually was. Every so often just reading something will help you grasp a concept better. We also discussed what happens when the Federal Reserve is the net buyer/seller of government bonds to the money supply, the interest rate and what it does to the economy. When it comes to government bonds being a “seller” is not good and can have very negative effects. This is exactly what drives the unemployment rate up. When it comes to government bonds being the “buyer” this is what needs to happen so that if a recession happens the economy can pull out of it. Having buyers and sellers is how the Federal Reserve controls fluctuation of inflation and interest rates. Bonds are specific rates of interest at the time of the loan, risk or demand. With the monetary policy being able to affect inflation expectations and

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