Unit 8 Day 3 Govt Policies w/i the Economy. Fiscal PolicyMonetary Policy Definition is the use of govt expenditure and revenue collection to influence.

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Unit 8 Day 3 Govt Policies w/i the Economy

Fiscal PolicyMonetary Policy Definition is the use of govt expenditure and revenue collection to influence the economy. the monetary authority (Federal Reserve) controls the supply of money, often targeting a rate of interest to attain a set of objectives oriented towards the growth and stability of the economy. Principle Manipulating the level of total demand in the economy to achieve economic objectives of price stability, full employment, and economic growth. Manipulating the supply of money to influence outcomes like economic growth, inflation, exchange rates with other currencies and unemployment. Policy-makerUS Congress and the Treasury Dept. Central Bank (US Federal Reserve) Policy ToolsTaxes; amount of govt spending Interest rates; reserve requirements

Ideas cont… Monetary Policy - Controls the money supply; literally shows how much money is in the economy; & what the interest rates are for borrowing money (US Federal Reserve) Fiscal Policy - Controls how much money a govt collects in taxes & how much it spends; a govt can only spend as much as it collects in taxes; anything above that amount is called borrowing which = deficit spending (US Congress)

Standard of Living the level of wealth, comfort, material goods and necessities available to a certain socioeconomic class in a certain geographic area. Includes factors such as: income, quality and availability of employment, class disparity, poverty rate, quality and affordability of housing quality and availability of education, life expectancy, political and religious freedom, environmental quality, climate and safety.

Poverty throughout the World

Literacy throughout the World

Price Indexes an index that traces the relative changes in the price of an individual goods over time. an index that traces the relative changes in the price of an individual goods over time. A price index will show how the economy is doing and letting people know if we have inflation or deflation. A price index will show how the economy is doing and letting people know if we have inflation or deflation. Consumer Price Indexes (CPI) - program produces monthly data on changes in the prices paid by urban consumers for goods/services. Consumer Price Indexes (CPI) - program produces monthly data on changes in the prices paid by urban consumers for goods/services.

Influence of Organizations on the Economy Commercial Banks play an important role in the financial system and the economy. As a key component of the financial system, banks allocate funds from savers to borrowers in an efficient manner. They provide specialized financial services, which reduce the cost of obtaining information about both savings and borrowing opportunities. These financial services help to make the overall economy more efficient. Commercial Banks play an important role in the financial system and the economy. As a key component of the financial system, banks allocate funds from savers to borrowers in an efficient manner. They provide specialized financial services, which reduce the cost of obtaining information about both savings and borrowing opportunities. These financial services help to make the overall economy more efficient.

The Federal Reserve System – is the central bank of the US (aka The Fed) The Federal Reserve System – is the central bank of the US (aka The Fed) It has a mandate to promote maximum employment, stable prices and moderate long- term interest rates. It has a mandate to promote maximum employment, stable prices and moderate long- term interest rates. They are to provide and maintain an effective payments system, supervise and regulate banking operations, and conduct monetary policy. They are to provide and maintain an effective payments system, supervise and regulate banking operations, and conduct monetary policy. The most important tool the Fed has to conduct monetary policy is the buying and selling of U.S. govt securities, which is often referred to as open market operations. The most important tool the Fed has to conduct monetary policy is the buying and selling of U.S. govt securities, which is often referred to as open market operations.