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Descripción de editorial
In most market based economies millions of buying and selling transactions are recorded each year. In the U.S. and EU the numbers are in the billions. And behind the transactions is a money support system which is supposed to make transactions easy to complete. This book provides a systematic economic analysis of the money market. The role of the Federal Reserve (Fed) as a central bank is highlighted. Its goals, tools and connections to the U.S. and the global economy are discussed. Changes in interest rates are shown to be outcomes of importance to businesses, governments and individual citizens from the money market.
Interest rates are defined as the time value of money to borrowers. There are many different interest rates and the Fed has the ability to directly or indirectly affect them all. As interest rates move they affect the economy in key ways. First, interest-rate movements affect business investment when companies borrow from banks to finance physical capital purchases, such as to buy new computer systems. Interest rates also affect exchange rates. The latter changes occur in the international money market where interest-rate movements affect the attractiveness of securities sold to foreign investors. Higher interest rates are bad for domestic businesses and good for government debt sales and businesses selling abroad. Looking one step further higher exchange rates also mean lower exports which is also bad for an economy.
The activities of central banks are daily news. The need for cheap and available financing remains one of the key concerns of businesses. Maintaining low interest rates until economic conditions improve such that unemployment drops to below 6.5 percent in the U.S. is a commitment that businesses appear to need. But what happens when unemployment reaches that threshold? With the tools and knowledge from this book students can begin tracking when interest rates will rise and analyze the options businesses have to offset the effects on the performance of their businesses.