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Macroeconomic Impact on Business Operation
University of Phoenix
MBA 501:   Forces Influencing Business in the 21st Century
Group # ON08MBA01



















The Board of Governors and Reserve Bank presidents are members of the Federal Open Market Committee. “The term monetary policy refers to the actions undertaken by a central bank, such as the Federal Reserve, to influence the availability and cost of money and credit to help promote national economic goals. The Federal Reserve Act of 1913 gave the Federal Reserve responsibility for setting monetary policy.” (FRB: Monetary Policy, 2008). The Federal Reserve decides if an increase in supply of money and aggregate demand is needed by assessing the economy’s performance.
The Gross Domestic Product is a tool used to measure the performance of the annual total output of goods and services. “According to initial GDP estimates released on April 30, 2008 output grew at an annualised rate of 0.6% in the first three months of the year--the same pace as in the previous quarter and faster than most people expected. The mix of growth was not good. Final sales fell while firms built up their stock, which bodes ill for future output. But with tax-rebate cheques arriving in the mail, a dose of fiscal stimulus is imminent.” (UOP Library, 2008).
Under gross private domestic investments houses are factored into the investment goods because the owner can rent out the house which brings in an income return. However, this can negatively affect the GDP because the market demands for housing due to the high foreclosure rate especially in California.   “The downturn in the homebuilding industry has shaved nearly a percentage point off GDP growth in the past year, but the curtailment of new supply has not been enough to restore balance to the housing market. The stock of lived-in houses for sale is already close to a 15-year high. The overhang of unsold homes is likely to grow, as more and more cheap...