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... Watkins
The process of making large purchases is an important and challenging stage in one’s life that requires the consideration of economic indicators and the Federal Reserve policy. ... The major indicators that would be the most useful in planning to finance a large purchase would be the Unemployment Rate and Consumer Confidence Index, which are two indices the Federal Open Market Operations Committee use to determine the federal funds rate. ... The Federal Reserve policy closely correlates with these indices. The long-term of Federal Reserve policy is price stabilization throughout the economy. From the three means the Federal Reserve uses to implement their policy, open-market operations are the most useful by adjusting the federal funds rate and in turn interest rates on loans, mortgages, and credit balances. ... More importantly, it is the first report that the Federal Reserve receives prior to their finalization of the upcoming interest rates. ... This is when the Federal Reserve steps in and implements open-market operations. In an attempt to bring inflation down to its normal rate, the Federal Reserve will sell their securities and tighten the market’s money supply. ... During this time, the Federal Reserve will decrease interest rates in an attempt to induce consumer spending. ... One distinct characteristic that the Consumer Confidence Index measures are intangible factors, such as the imminence of war, that carry much weight with the decision of interest rates by the Federal Open Market Committee.
Approximate Word count = 1066
Approximate Pages = 4.3
(250 words per page double spaced)
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