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Fed fiscal monetary policy
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Fed fiscal monetary policy

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    Fed fiscal monetary policy Fed fiscal monetary policy Presentation Transcript

    • Bellringer1. What can the government do to effect the economy? 2. Pick 1 of your answers to #1 and give a positive effect for society 3. Pick 1 of your answers to #1 and give a negative effect for society
    • Great “Great Depression Recession” Housing Crisis1929-1933 2007-200927% drop in GDP 5 % drop in GDP25% Unemployment 10% Unemployment36% drop in World 20% drop in World trade trade43 straight months of 18 straight months of declining spending !!!! declining spending Source Yoram Bauman, World Bank
    • EconomistsJohn Maynard Keynes • Fredrick HayekActive fiscal policy • “invisible hand”Deficit spend • Monetary policyGovernment multiplier • Interest rates
    • Fiscal Policy• Controls “G”• Effect on “C”, “I”, Unemployment• Taxes• Loopholes• Spending
    • Monetary Fiscal Policy Policy • Controls “G”• Interest Rates • Effect on “C”, “I”, Unemployment• Money Supply • Taxes • Loopholes • Spending
    • How does the US banking system work?
    • What is a Credit Union then?• Smaller, regional, non-profit, theme based, lower rates
    • Does the bank have to keep all the money you deposit on hand? NO, fractional reserve system
    • Who sets the reserve rate?• “The Fed”• 1913
    • How does “the Fed” work?
    • Who controls “the Fed”?
    • What does “the Fed” do? Controls Money supply Clears Supplies Checks Money THE FED Gov’t Sets Accounting ReserveRequirements Supervise Banks
    • 8. Why is the Chairman of the Fedsometimes thought of as the “second most powerful man in the US”? 398-399 • Cause: increases the reserve rate • Effect: • Cause: lowers reserve rate • Effect:
    • What if the bank goes out of business?• $250,000 per US account
    • What about other countries?
    • Book 398-407• Write a 1 page letter to Fed Chairman Ben Bernanke• Explain whether you support a expansionary or contractionary policy in 2010• Mention what your policy might do to US unemployment now at 10.2%• Mention what your policy might do to US inflation now at 0.2%• Fed Funds rate now at 0.5 % (50 cents/$100)
    • After Inflation & Unempl sheets finishedWrite a 1 page letter to Congressman Raul Grijalva2 fiscal policy changes you agree with, be sure to include the effects of those changes