How does the Gov’t address the Problems with the Business Cycle (Inflation and Recession) 1. Fiscal Policy 2. Monetary Policy.

Slides:

Advertisements

Similar presentations

Federal Reserve and Macroeconomic Policy

Advertisements

The Federal Reserve (Review From Monday)

Fiscal and Monetary Policies The Government’s Role In the Economy.

MONETARY POLICY Actions the Federal Reserve takes to influence the level of GDP and the rate of inflation in the economy.

Macroeconomics Study Guide. How do we measure the health of our economy? First Economic Indicator: GDP Second Economic Indicator: Inflation Third Economic.

The Federal Reserve. What is the Federal Reserve??  central bank of the US  created in 1913 by an act of Congress & restructured after the Great Depression.

The Federal Reserve “The Fed”. The Fed The Federal Reserve is our nation’s bank Their customers are: 1.The Government 2.Banks – Wells Fargo, Bank of America.

Government & the U. S. Economy What does the government do to keep the U.S. economy from acting like a roller coaster: INFLATION rising prices & increasing.

 Fiscal Policy: The use of government expenditure (spending) and revenue collection (taxation) to influence the economy.  Who makes fiscal policy in.

Monetary Policy Involves controlling the money supply to change the level of GDP or the rate of inflation.

Chapter 15 The Federal Reserve System & Monetary Policy

Chapter 15: Monetary Policy Federal Reserve Board Chairperson Federal Reserve Board (7) Federal Open Market Committee (12) Deliberate changes in money.

Monetary Policy.

Monetary and Fiscal Policy. Monetary Policy Why the need for Regulation of the money supply? U.S. experienced bad recessions and inflation in the late.

FISCAL AND MONETARY POLICY. ECONOMIC GOALS Full Employment Enough jobs to employ all able and willing to work Unemployment/Employment Data Bureau of Labor.

Do you know anyone who is paying a mortgage off? How many people in this class want to own a home?

Economic Policy Fiscal and Monetary Policy What is policy? –Actions decided upon by government agencies/branches and usually involving choices among.

Mr. Weiss Fiscal and Monetary Policy – Section 6 The Federal Government uses fiscal policy to act in a counter-cyclical manner. The Federal Reserve uses.

Taxes & Gov’t Spending Fiscal Policy Monetary Policy Potpourri Federal Reserve & More Monetary Policy

Government and the Economy Role of Government Money and Banking The Federal Reserve Government Finance.

Money Supply & The Fed How the Fed “creates” money.

Money Fiat/Legal Tender – money that has value because a government fiat, or order, has established it as acceptable for payment of debts. Medium of Exchange.

Monetary Policy review huh???? can you break it downnnnn??? MMMMonetary policy – things the Federal Reserve does to regulate the economy & influence.

Monetary Policy Tools Chapter 16 Section 3Chapter 16 Section 3.

THE FEDERAL RESERVE SYSTEM SSEMA2 The student will explain the role and the function of the Federal Reserve System.

Do Now: What do you already know about the Federal Reserve?

Fed tools for changing the Money Supply. Mr. Nunn.

Monetary Policy Control of money supply (M) and interest rates (i)

MONETARY POLICY Conducted by: the Federal Reserve System.

Monetary and Fiscal Policy. How do we promote Economic Growth? Fiscal Policy: Actions done by the government to increase GDP and stabilize inflation Monetary.

 Fiscal Policy: The use of (Tools):  1. government expenditure (spending)  2. revenue collection (taxation) to stabilize the business cycle.  Who.

Monetary Policy Using the amount of money and credit available to consumers to ……. influence the economy.

Fiscal Vs. Monetary. Fiscal Policy 1) Taxes and Spending -raise taxes, cut spending -cut taxes and raise spending.

1 The role of the Fed is to “take away the punch bowl just as the party gets going”

American Government Unit Chapter 16: Financing Government IV. Fiscal and Monetary Policy.

Chapter 12 Monetary Policy.

The Federal Reserve System and Monetary Policy. Money Final payment for goods and services Purposes of money: – Medium of Exchange: It can be used to.

FISCAL & MONETARY POLICIES Controls the amount of money circulating in the economy.

Monetary Policy Ch19 Notes. I. Monetary Policy A. Functions of the “the Fed” 1. To keep the money supply in check so that the economy does not have a.

Today’s Topic: Fiscal Policy What is fiscal policy? –The taxing and spending policies of our national government Who controls fiscal policy? –Congress.

Actions of the Federal Reserve

Monetary Policy Using the amount of money and credit available to consumers to influence the economy.

Federal Reserve Created in 1914 after a series of bank failures Central bank: bank that can lend to other banks in times of need.

Monetary and Fiscal Policy. Monetary Policy Why the need for Regulation of the money supply? U.S. experienced bad recessions and inflation in the late.

AIM:How does the Federal Reserve handle monetary policy? Yr8Vghttps:// Yr8Vg Do Now:

Macroeconomics The study of behavior and decision making of entire economies.

Intro to Fiscal and Monetary Policies Unit IV: Finance and Banking and Unit V: Inflation & Unemployment Stabilization Policies Mr. Griffin AP Econ – Macro.

THE FEDERAL RESERVE SYSTEM. THE PROBLEM Up until the early 1900s, many banks lacked adequate reserves to meet the needs of the public Banks operated on.

Monetary Policy What is the FED and what does it have to do with me? Schrute Bucks.

5/7Warm Up What monetary policy tools can the Fed use to slow down rapid economic growth?

DEBIT CARDS VS. CREDIT CARDS How are they different???????

Monetary Policy Tools Describe how the Federal Reserve uses the tools of monetary policy to promote price stability, full employment, and economic growth.

Chapter 16: Financing Government Section 4. Copyright © Pearson Education, Inc.Slide 2 Chapter 16, Section 4 Key Terms gross domestic product: the total.

Fiscal & Monetary Policy. Economic Policy Objectives of the US Government:

Unit 6 Monetary and Fiscal policies How to influence the business cycle…

What is the FED and what does it have to do with me?

Actions of the Federal Reserve

Monetary Policy Practice EOCT Questions

Monetary Policy vs. Fiscal Policy

What is the FED and what does it have to do with me?

-How a government taxes and spends money

Sponge Quiz #1: In Year 1, the cost of a market basket of goods was $720. In Year 2, the cost of the same basket was $780. What was the consumer price.

The Federal Reserve System

Ch. 18 ECONOMIC POLICY.

Federal Reserve Monetary Policy Fiscal Policy Taxes

Reserve Requirement (aka Reserve Requirement Ratio or Reserve Ratio)

Actions of the Federal Reserve

Fiscal and Monetary Policy

BANKING & MONETARY POLICY

Reserve Requirement (aka Reserve Requirement Ratio or Reserve Ratio)

Presentation transcript:

How does the Gov’t address the Problems with the Business Cycle (Inflation and Recession) 1. Fiscal Policy 2. Monetary Policy

Fiscal Policy Definition: Using taxing & gov’t spending to stabilize the economy. Who is in charge of Fiscal Policy? 1. The President – proposes a budget and suggests tax policy 2. Congress - approves President’s budget and is responsible for tax policy

2 Tools used to in Fiscal Policy 1. Taxes - Increase or Decrease 2. Gov’t Spending (budget) - Increase or Decrease

FISCAL POLICY Slow Economy (Inflation) Grow Economy (Recession) Decrease Taxes Increase Spending Increase Taxes Decrease Spending

Monetary Policy Definition: Controlling the amount of money and credit available to help stabilize the economy. Who is in charge of Monetary Policy? 1. Federal Reserve

What is the Federal Reserve (FED)? It is the central banking system for the United States (MAMA BANK) If the commercial “baby” banks (Bank of America, Wachovia) need to borrow money they ask to the Federal Reserve. Federal Reserve tells the baby banks what to do.

3 Tools used in Monetary Policy Discount Rate - The interest rate the Fed charges a commercial “baby” bank if they borrow money to loan to customers. Reserve Requirement - The amount of money that “baby” banks must have in their vaults at the end of the day. Open Market Securities (Bonds) - Bonds the “Fed” buys or sells to the “baby” banks.

Monetary Policy Slow Economy (Inflation) Grow Economy (Recession) Increase Reserve Requirement Increase Discount Rate Sell Securities Decrease Discount Rate Buy Securities Decrease Reserve Requirement

Review Fiscal Policy Definition: Who is in charge? RecessionInflation Taxes Spending Monetary Policy Definition: Who is in charge? RecessionInflation Discount Rate Reserve Requirement Open Market Operations