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Essay / Research Paper Abstract
This 5 page paper discusses an article provided by the student and shows how a decisions by the Federal Reserve to change interest rates may have consequences in the global economy. The bibliography cites 2 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEartglo.rtf
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Unformatted sample text from the term paper:
can have a major impact on other economies, especially if these are unexpected, with the occurrence of knee jerk actions. The market will react in terms of expectations, where
expectation are good, then the market will react in a more robust manner, and as such news may have a lesser impact on the markets as a whole. The growth
of the US s foreseen as needing to have an increase in the interest rates on the near future, and as a result of this foreseen heed, and the impact
that the US will have on the rest of the world the IMF is urging for signalling to take place. Signalling is a tool use d by many companies
when they want to indicate internal performance, and a tool that can also be seen as a partial remedy for asymmetrical information, indicating to the outside market information that may
only be known by those internal to the decision making process. If the interest rate goes up in the US this will make the currency stringer, and although there
will be a greater ability for the US to import goods, as the relative price will decrease, exporting will be harder as for other countries there will also be an
increase. The aspect of interests rates is also important when it comes to managing the economy, Interest rates can be used to control the level of disposable income in
an economy. In the US there has been a weak economy for some time, so interest rates have remained low, to maintain high levels of disposable income, that can be
spent in the economy and stimulate economic growth. If interest rates increase the Federal Reserve may prevent inflation taking hold as an economy builds, but this will also reduce the
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