Chapter 15 and 16

I can describe the structure of the Federal Reserve System. 1) Board of Governors responsibilities, terms, current chair) 2) District Reserve Banks (number, actions, responsibilities) 3) Member banks (services they receive from the Fed) 4) FOMC (purpose and members)

1)they are located in Washington D.C, there are 7 governors, they are appointed by the president and confirmed by the senate, they serve 14 staggered terms, they guide monetary policy action, analyze domestic and international economic and financial conditions, and participate in FOMC. 2)There are 12 banks, they store checks and electronic payments, store currency and coin, commercial banks, and handle treasurys payments. 3)National banks must be members of the committee. 4)Formulation of a policy designed to promote stable prices and economic growth.

Inflation Rate

1-3%

Name and identify the three goals of the fed and federal government

1. Stabilize the economy 2. Promote price stability 3. Promote maximum sustainable employment

List the tools of fiscal policy

1.Tax policy 2.changes in government spending

What are the 3 tools of monetary policy?

1.open market operations 2.reserve requirement 3.discount rate

good range for unemployment

4-6%

Explain the difference between a budget deficit and national debt.

A budget deficit is a situation in which the government spends more than it takes in; they usually occur in any year when expenditures exceed revenues. A national debt is all the money the federal government owes to bondholders; they grow every year there is a budget deficit.

I can explain the limits of fiscal policy (think: why does fiscal policy not always work as a tool to fix the economy).

Changing spending levels, predicting the future with delayed results.

I can define easy money policy, explain when the Fed uses easy money policy (think about what is wrong with the economy), list the tools of easy money policy, and explain how it works

Easy money- money supply goes up, interest rates go down, borrowing and spending goes up. Tools: They buy bonds, the discount rate goes down, and the reserve requirement goes down Tools/Actions the fed can take--- 1. OMO 2. Discount rate 3. reserve requirement

Economy doing good or bad?

Economy is doing good

Analyze the impact of fiscal policy decisions on the economy.

Expansionary fiscal policies try to increase economic output (to get out of a recession). Contractionary policies attempt to decrease economic growth (to stop inflations).

I can explain why the federal government is in debt and the potential problems with national debt.

Federal borrowing lets the government undertake more projects than it could otherwise afford. The national debt is owed to investors who hold treasury bonds, bills, and notes.

I can identify intended and unintended consequences of 1) changes to the federal budget 2) changes to taxes

Intended: increase in money, slows inflation Unintended: taxes getting raised, decreases demand

Identify the limits of fiscal policy.

Limits of fiscal policy include difficulty of changing spending levels, predicting the future, delayed results, political pressures, and coordinating fiscal policy.

Explain how the government creates the federal budget.

The President proposes the budget with inputs from all executive departments and works with the Office of Management and Budget to create the budget.

I can define interest rates. I can explain how changes in interest rates affect borrowers and savers.

The proportion of a loan that is charged to the loaner. If there is tight money interest rates go up, if there is easy money interest rates go down.

Define fiscal policy

The spending and taxing policies used by congress and the president.

I can explain how money is created (NOT PRINTING MONEY).

Through giving out loans

I can define tight money policy, explain when the Fed uses tight money policy (think about what is wrong with the economy), list the tools of tight money policy, and explain how it works

Tight money- money supply goes down, interest rates go up, borrowing and spending goes down. Tools: sell bonds, the discount rate goes up, and the reserve requirement goes up.

What is monetary policy?

Tools used by the federal open market committee to influence the availability of credit and money supply.

I can explain how changes in the money supply affect interest rates, borrowing, and spending.

When banks have more to lend: money supply goes up, interest rates go down, and borrowing and spending goes up. When banks have less to lend: money supply goes down, interest rates go up, and borrowing and spending goes down.

I can explain how the federal government develops the budget. *know the steps and who is involved

When the federal government's revenues equal its expenditures in any particular year, the federal government has a balanced budget, however, it is usually either running a surplus or deficit.

I can identify expansionary policy

expansionary policy: seeks to expand the money supply to encourage economic growth or combat inflationary price increases. see graphic organizer

1) define contractionary policy 2) list the tools of contractionary policy 3) identify when contractionary policy is used (think: what is wrong with the economy) 4) explain how contractionary policy works to influence the economy (specifically relating back to the goals of the government/fiscal policy)

used to fight inflation which involves decreasing the money supply in order to increase the cost of borrowing which in turn decreases GDP and dampens inflation. see graphic organizer