GOVERNMENT 2
a. Identify and explain one way the government uses monetary policy to influence the
economy.
Increasing Interest Rates
The interest rate is the expressed annual payment made by a borrower to the lender in
exchange for a loan. It grows with the increase in lending rates. The Federal government
raises the interest rates through the Federal Reserve Bank (Leeper & Walker, 2011). The
agreed upon rate is called the Federal Reserve rate which the government uses to control the
rate at which banks borrow from it and the rate at which the banks lend the money out. It
means that increasing the Federal Reserve rates forces the local banks to raise their lending
rates. Increased bank lending rates discourage nationals from borrowing to control inflation
efficiently.
b. Identify and explain one way Congress can influence the economy
Ratification of Monetary Policies
Congress influences the economy of the states by passing the federal budget and acting on tax
and spending legislation of the nation. Policies are tabled by the president, which are then
ratified by Congress (Galbraith, 2017). The Joint Economic Committee, composed of ten
members of the House of Representatives and ten Senators, is responsible for advising
Congress on the best legislation to ratify. It is a permanent committee that advises Congress
on economic issues and when to pass monetary policies that can influence the economy.
c. Identify and explain one way the president can influence the economy.
Economic Policies
The economic policies by the president define the bearing of the economy of the country.
Economic growth and decline depend upon the president and the policies that he puts forth.
For this reason the president gets accolades for economic growth and blame for a slump in
