Daphne Johnson
ECON230 Macroeconomics
Dr. Jeff Bajah
December 5, 2021
Milestone 3
Section I
The Federal Reserve banks which are created by Congress give the United States economy cushion of security. When companies need financial security, they call on the Fed’s. The central banks of the US as they are broken down from state to state. According to the September 2021 report from the Board of Governors about the Federal Reserve System, this system conducts a monetary policy that outlines employment, stable prices, and moderate long-term interest rates in the U.S. economy. (The Fed Explained, 2021, para.1) Which brings me to my next point on which of federal reserve banks does McDonalds corporations operate under.
McDonalds was founded in California which makes it the key state. The Federal Reserve bank of California sits in the heart of San Francisco and is in the 12th Federal Reserve District. This district includes the nine westerns states which are Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah, and Washington. (12th District, 2018, para 1) China is one of the heavy hitters with McDonalds and unlike the US that has a Federal reserve bank, China has their own banks called, “The People’s Bank of China, the country’s central bank, has been developing a digital currency over the past few years”. (Cheng, Kharpal, 2020, para 2)
The primary job of the Federal Reserve bank is to monitor the possibility of inflation and try to keep it under control. Inflation as we know it can put the US in a financial crisis. According to (Rich, 2013), “The Great Recession began in December 2007 and ended in June 2009, which makes it the longest recession since World War II.” In order to get a handle on inflation, the Federal reserve will have to use the monetary policies as you will see later in the paper to control inflation.
Section II
The Central banks have a big effect on McDonalds economic growth. The Central banks are based from the Federal reserves and operate one to another. I found an article on how the Fed’s created emergency leading programs to bail out many corporations during an emergency and McDonalds was on the list. According to the article, “documents show that some of the biggest names in American business were either coming to the Fed in need of a bailout, or trying to make money at a time when the Fed was trying to entice investors back into the markets”. (Dash, 2021, para. 6). McDonalds was a part of the Commercial Paper Funding Facility, which was in debt and brought by the Fed’s well into 2009 the commercial paper market was impaired. (Dash, 2021, para 23-24). The Commercial Paper Funding Facility CPFF was created to give issuers and investors that firms and municipalities will be able to roll over their maturing commercial paper. As I mentioned earlier in the paper China has their own central banks and are working on something new digital currency. I did not read into exactly what that is but I’m defiantly going to follow up.
Section III
How does the Fiscal policies and Monetary policies effect McDonalds? These policies effect McDonalds like any other corporation. There are policies set in place and they must be followed. Monetary policies have a set of criteria to outline the management of money supply and interest rates. Unlike fiscal policies which are polices to control government spending and how it is used in the economy. McDonald’s has a set of business policy, which are reported to the Central banks, their business pattern, production, employment sector, market operations, and economic environment control situation are informed by fiscal policies. (Circle of Busines, 2021 para. 2) The policies will affect day to day operations like supply goods and services to the consumers. Also, unemployment may or may not increase due to the fall in demand. According to the article, “If the government takes initiatives they can train and educate the employees of McDonald’s for their betterment and improved work performance.” (Circle of Busines, 2021 para. 3) The fiscal and monetary policies as I understand are a set of policies that can improve a company’s financial crisis by maintaining the productivity and success of the organizations yearly outcome.
McDonalds is one of my favorite restaurants, as a child I ate McDonalds on regular bases. I wanted to work at McDonalds, and I did as a manager for over 5yrs. I also said I wanted to own one, but after this class and in-depth research I totally have a knew outlook on owning a franchise. I am going to stick to the drive thru.
References