Transcript Lesson Five: Fiscal and Monetary Policy

We will be using Cornell Note Taking
Format Today!
Let’s Get Fiscal!
Happy thought for the
day: “There are only two
certainties in life: Death
and taxes!”
Unit Two: Learning Objectives:
North Clackamas School District
Social Studies Priority Standards:
Econ 46. Distinguish between fiscal and
monetary policies and describe the role and
function of the Federal Reserve.
Lesson Three: Daily Learning Target
I Can define and explain in writing the
following key Economic concepts:
Fiscal Policy
“G”: Government Spending
“T”: Taxes
Monetary Policy
The use of government
spending and revenue
collection to influence the
economy.
• This Lesson confronts the following questions:
I’ll throw money
at the problem.
http://zfacts.com/p/461.htm
$9 trillion
$8 trillion
$7 trillion
Social
Security
[20%]
Interest[6%]
Defense
[19%]
Medicaid
[8%]
Medicare
Welfare
[13%] Unemployment
[16%]
[This is held both privately and publicly]
U.S. Banks And other
Financial Institutions
Other, Including
State and Local
Governments
11% 7%
7%
Federal
Reserve
23%
Foreign
Ownership
10%
36%
U.S.
Government
Agencies
U.S.
Individuals
Total Debt: $14.9 trillion
Thanks, we need this for
our crumbling infrastructure.
Think of the “G” & Fed as doctors of the economy.
They keep track of vital signs [GDP, Inflation, unemployment, etc].
If a problem arises, they step in to prescribe a remedy.
Even if I have to dig a
hole and cover it back
up, I do have a job.
Peak
Peak
Trough
Unempl. check
Teddy?
1981
It took 200 years to
accumulate the 1st
$1 trillion of Debt.
2014
It has taken 32 years to
accumulate $16
trillion
$55,000 each
more.
[now $17.6 trillion]
Will today’s children bear the burden of debt?
“Monetary Policy” refers to the
actions that the Fed takes to
influence the level of GDP and the
rate of inflation in the economy.
…to assist the economy in
achieving a full employment,
non-inflationary level of output.
1. Discount Rate – when banks borrow from
the Fed.
2. Reserve Ratio – how much of demand
deposits that have to be kept in reserve and
can’t be loaned out.
3. Buying [recession gap] and selling
[inflation gap] of securities.
Effectiveness of Monetary Policy
Strengths of Monetary Policy
1. Speed and flexibility –can quickly be altered (compared to fiscal policy).
This can occur on a daily basis and influence interest rates and the MS.
2. Isolation from political pressures – because of the 14 year terms. They can
enact unpopular policies which might be best for our economy’s health.
$107,000 to study the sex life of
the Japanese quail.
$1.2 million to study the breeding
habits of the woodchuck.
$150,000 to study the HatfieldMcCoy feud.
$84,000 to find out why people
fall in love.
$1 million to study why people
don't ride bikes to work.
Some of the MOST ABSURD PORK
$19 million to examine gas emissions
from cow flatulence.
$144,000 to see if pigeons follow human
economic laws.
Funds to study the cause of rudeness
on tennis courts and examine smiling
patterns in bowling alleys.
$219,000 to teach college students how
to watch television.
$2 million to construct an ancient
Hawaiian canoe.
$20 million for a demonstration
project to build wooden bridges.
$160,000 to study if you can hex
an opponent by drawing an X on
his chest.
$800,000 for a restroom on Mt.
McKinley.
$100,000 to study how to avoid
falling spacecraft.
$16,000 study of the komungo, a
Korean instrument.
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