Buy an essay: Money & Interest

1. Speaking about the major economic indicators got to be examined, when I am planning to make a large purchase and need a loan, I would like to start with the examination of the price scale within the industry I am going to make purchase. If it would a car, I would start examination of the car industry, the rate of popularity, price variable. These economic factors would perfectly illustrate the economic development of the industry and signify the most popular models and changing of the price through the recent years. It would help me to understand what price category is suitable for me. It goes without saying that international developmental factors impact a lot on the car market and the others. The following factors are among the core ones and the best international economists are talking about the forecasting future interest rates. They are not very optimistic and the prognosis is really bad. The rough majority of the international economists consider that there could be outlined several most fundamental powers that regulate the interest rate increasing and decreasing. It would be obvious to note that it is impossible to predict, when one of these powers would became active, hence it would be important to know what are they:
 “The amount of money saved in the economy, mostly households. That means you.
 Business demand for these funds to be used to finance new plant construction, equipment, and inventories or supplies.
 The governments net supply of funds or demand for funds” (Woodruff, 2005)
As I need to make a loan to buy I need a detailed examination of the financial establishment that would provide me a load. It goes without saying that reliability of this bank or association and its economical stability would be examined thoroughly by me and my lawyer. Understanding that I would need guarantees of reliable partnership, it would be better to turn to the federal credit alliance as the recent world financial crisis had a severe negative impact on the commercial crediting institutions all over the world.
2. It won’t be a secret that Federal Reserve System responses for the United States monetary policy and systems. It is considered that government impacts the economic activity in quite specific way: they manipulate the interest rates and the money supply. There are two ways with the help of which government try either maintain or achieve high levels of price stability, economic growth and employment. They are monetary and fiscal policies. It should be noted that Federal Reserve System, responsible for the U. S. monetary policy, uses three main tools which are:
– the discount rate: “Banks also can borrow reserves directly from the Federal Reserve Banks at their “discount windows,” and the discount rate is the rate that financially sound banks must pay for this “primary credit.” The Boards of Directors of the Reserve Banks set these rates, subject to the review and determination of the Federal Reserve Board” (Federal Reserve Bank of San Francisco, 2007).
– reserve requirements: “Banks and other depository institutions (for convenience, we’ll refer to all of these as “banks”) keep a certain amount of funds in reserve to meet unexpected outflows” (Federal Reserve Bank of San Francisco, 2007). It should be noted that the banks are allowed to keep the reserved as the deposits in the Fed, as well as cash in the certain valuts. Actually the banks are demanded to keep certain sums in reserve. Traditionally they hold even more than the prescription demands
– open market operations: “The major tool the Fed uses to affect the supply of reserves in the banking system is open market operations — that is, the Fed buys and sells government securities on the open market. These operations are conducted by the Federal Reserve Bank of New York” (Federal Reserve Bank of San Francisco, 2007).
Higher interest rates lower purchasing and lower interest rates increase purchasing. Fed perfectly regulates the interest rates to my mind and any changes made within the federal policy could have negative impact on the economy and cause inflation. This would negatively affect the purchasing ability of the potential buyers.
3. Speaking about the last question I would like to focus on the fact that changes in Federal Policy does not affect on my wish to make a purchase if it won’t increase the interest rates. I have focused in the very beginning that the economical factors are the core ones for me to make a decision for the purchase, which will require additional finances. It goes without saying that if the changes in the policy would have strong connection to the economics destruction and make the interest rates higher, that it would possibly influence my wish to make a purchase, which require additional expenses and loan. It won’t be a secret that financial processes are closely connected and the changes in the federal policy and sometime even have a huge impact on the international economy. I would take into account possible changes, hence they won’t provide the core impact on my decision.