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Monetary and Fiscal Monetary and Fiscal

Monetary and Fiscal - PowerPoint Presentation

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Uploaded On 2016-07-15

Monetary and Fiscal - PPT Presentation

Policy Economics Monetary Policy Monetary Policy The expansion or contraction of the money supply in order to influence the cost and the availability of credit Federal Reserve Privately owned publicly run central bank of the United States of America ID: 406029

policy spending investment government spending policy government investment keynes monetary deficit price supply economy production taxes fiscal lack federal

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Presentation Transcript

Slide1

Monetary and Fiscal Policy

EconomicsSlide2

Monetary Policy

Monetary Policy

The expansion or contraction of the money supply in order to influence the cost and the availability of credit

Federal Reserve

Privately owned, publicly run, central bank of the United States of AmericaSlide3

Policy Matters

The Federal Reserve takes place in Monetary Policy

They do this by either expanding or contracting credit markets

This is done by the raising or lowering of their interest ratesSlide4

Government Spending

Deficit Spending

This is the annual government spending in excess of taxes and other revenues

The continued use of Deficit spending in the United States is why our national deficit has now exceeded 13 trillion dollarsSlide5

Fiscal Policy

Fiscal Policy

This is the use of government spending and revenue collection measure to influence the economy

Keynesian Economics

These are a set of actions designed to lower unemployment by stimulating aggregate demandSlide6

More Keynesian

Keynes uses the following formula to determine what is wrong with GDP

This formula is GDP= C+I+G+F

After study, Keynes argued that lack of investment is what kills economic growthSlide7

The Effect

Keynes said that the lack of investment snowballed into lack of spending in other sectors

This is known as the multiplier effect

Further damage is done through the accelerator concept

This states that since there is less spending in the economy, investment slows even further, therefore causing the multiplier affect all over again.Slide8

The Role of Keynes

Through Keynes theory, the Government is supposed to be a counterbalance to changes in investment

This means that as private investing goes up, government investment goes down. This is also true in reverse.

This however has caused issues such as

deficit spending

as

government

agencies have issues cutting their own budgetsSlide9

Supply Side

Supply-side economics

These are policies designed to stimulate output and lower unemployment by increasing production rather than demand.

This policy can be enacted in a couple ways

Smaller Government

This includes deregulation of industry to allow them to more directly control their means of production

Lower Federal Taxes

This concept argues that if taxes are lower, more people will want to work, therefore increasing production and employment.Slide10

Price Controls

These are government controls on prices throughout the economy

Price Ceiling-

These are the highest prices that can legally be charged for a type of good

Price Floor-

These are the lowest prices that can legally be charged for a type of good