For the reputation management company, being able to understand how the economy is performing is crucial for a unique business like theirs. They have a luxury service that deals with online reputation management that not many individuals think that they need but they most probably do need this type of service. In order to manage the economy’s performance, monetary policy is something that is used which involves a plan set by the government in order to increase or even decrease the money supply and to change banking requirements and interest rates to affect bankers willingness to make loans. There is even an expansionary monetary policy is a plan to increase the money supply and try to decrease costs of borrowing and this can be done by also lowering interest rates to encourage new investments and increase employment and economic growth. There are even restrictive monetary policy is a plan to decrease money supply to control rising prices, overexpansion, and concerns about overly rapid economic growth.
Fiscal policy is also important to understand for the economy since this is a plan of government spending and taxation decisions that are there to control inflation, reduce unemployment, improve general welfare, and encourage economic growth. There is an annual plan that is called a federal budget and this is the government’s plans on whether they will raise and how they will spend their money in the following year. Government funds come from taxes, borrowing and fees. If the government spends more than the amount of money raised, there will be a budget deficit. This is why we borrow money to cover deficit and then the national debt will get increased. If the government has more money than they spend, then there will be a budget surplus in the economy.