The macroeconomics goal of the study of economies is to make analysis of economic activities at a national or international level and make recommendations for change in those economic activities. The major goals of macroeconomic theory are that the behavior of markets is predictable and consistent; that the economy should not be allowed to get “stuck” on a particular course of action; that the level of employment should not fall below the capacity of a nation's resources to provide for it; and that changes in monetary policies and fiscal policy, when necessary, should not result in unemployment. Some of these macroeconomic goals are often considered a part of an overall macroeconomic theory.
In the United States the Federal Reserve has been charged with the responsibility of maintaining the level of interest rates at the Federal Reserve Board and maintaining the stability of the money supply by using its central bank. It is also responsible for supervising the functioning of the major financial institutions in the country. The Federal Reserve acts to keep interest rates low in order to encourage more borrowing and investment from borrowers and less borrowing and investment from lenders.
In the United States, a major part of the research and policy of the Federal Reserve is focused on the interest rates it controls. As a part of the overall macroeconomic theory, it is believed that interest rates have an important effect on the economy. In the United States, a large part of the analysis of interest rates in the United States is based on the theory of the Phillips Curve. This curve, developed by Scottish economic analyst John Maynard Keynes, shows that increases in interest rates, on average, reduce the economy's capacity to produce income.
The main objectives of the Federal Reserve Board in determining interest rates are to increase economic activity and to reduce unemployment. Although many economists believe that the Federal Reserve's interest rate decisions have a great impact on the economy, some of them also argue that there are other factors involved in influencing the interest rate. For example, the Federal Reserve Board may raise the interest rate in order to increase inflation, which may lead to higher prices for goods and services and lower economic activity.
Many of the macroeconomists who study interest rates, as well as the overall macroeconomics theory, believe that the Federal Reserve is able to influence economic activity by influencing the supply and demand for money. They believe that the Federal Reserve has the power to manipulate the supply of money, especially the money supply that circulates within the economy and affects interest rates. In addition, they believe that the Federal Reserve can affect economic activity by influencing the . . . . . . price levels.
In spite of these macroeconomic beliefs, many critics of the Federal Reserve maintain that interest rates do not necessarily reflect the Federal Reserve's actions, and the level of inflation or deflation within the economy. These critics also argue that interest rates can only serve as a guide to the extent to which the Federal Reserve is able to manipulate the economy.