Fiscal _amp; Monetary policy Review.ppt - Wikispaces by yurtgc548

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									                            Vocab.
        Monetary   Fiscal
FED                                       ?
         Policy    Policy



100     100        100      100        100

200     200        200      200        200

300     300        300      300        300

400     400        400      400        400

500     500        500      500        500
      End Game              Double Jeopardy
What is the full name of the FED




               100     Check Answer
Federal Reserve System




             100
What are the 12 banks that carry out the
FED’s policies?




                   200      Check Answer
Federal Reserve Banks




         200
Who sets the Fed’s policy on the purchase
and sale of gov't securities?




                    300      Check Answer
FOMC




       300
What group of people run
       the FED?




           400    Check Answer
Board Of Governors



         400
Who is the Chairman of the
  Board of Governors?




          500    Check Answer
Ben Bernanke




   500
FED’s decisions that affect the money
supply is called….




                  100      Check Answer
Monetary policy




      100
The buying and selling of government
             securities




                200     Check Answer
Open-Market Operations




          200
When the FED wants to make loans
         more attractive




            300     Check Answer
       Loose Money/
Expansionary Monetary Policy



             300
  When the FED wants to
   discourage banks from
loaning out too much money




            400    Check Answer
         Tight Money/
Contractionary Monetary Policy



             400
What are the THREE tools of
         the FED?




           500    Check Answer
     1.Discount Rate
  2.Reserve Requirement
3.Open Market Operations



         500
What are the two major tools
     of fiscal policy?




             100   Check Answer
       1.Taxes
2.Government Spending




         100
What fiscal policy would not
help solve the unemployment
          problem?



           200    Check Answer
Higher taxes




    200
What should the fiscal policy be
 during a (1) recession and (2)
 inflation using the Keynesian
          philosophy?


              300   Check Answer
1.Reduce taxes, increase
  government spending
2.Increase taxes, decrease
  government spending



                300
  When will discretionary fiscal
policy most stabilize the economy?




               400    Check Answer
Deficits occur during recessions
  and surpluses occur during
            inflation



              400
What is automatic stabilizers?
     Give an example.




             500    Check Answer
Money that changes hands from
taxpayer to non-taxpayer; social
      security payments,
 unemployment compensation,
    US income tax system

            500
 Informal name for the
Federal Reserve System




            100   Check Answer
The FED




   100
Interest that banks charge
   each other for loans




            200    Check Answer
Federal funds rate




      200
Interest the FED charges banks
            for loans




             300    Check Answer
Discount rate




     300
The interest rate banks charge their
          best customers



                400     Check Answer
Prime Rate




  400
What are the 4 functions of
        the FED?




          500     Check Answer
     1.Check clearing
2.Distribute paper currency
     3.Bank for banks
  4.Bank for government



           500
How do the members of the
 Board of governors get
       their jobs?



          100   Check Answer
Appointed by President and
confirmed by Senate




            100
What is the FED trying to do to the
nations money supply if it increases
the discount rate?




                   200     Check Answer
Decrease money supply




          200
What happens to the reserves of
member banks when they borrow
from the FED?


              300   Check Answer
Reserves Increase




       300
When the FED practices an
expansionary Monetary policy,
what happens on the open market?



               400    Check Answer
FED Buys Securities




         400
What are the 4 functions of the FED?




               500      Check Answer
1. Clears checks
2. Bank for Banks
3. Bank for Govt
4. Distribute Paper Currency




        500
More     More        Budgets                 More
Fiscal   FED                   Misc.         MISC.


200       200        200       200            200

400       400        400       400            400

600       600        600       600            600

800       800        800       800            800

1000      1000       1000      1000           1000

          End Game                    Final Jeopardy
What should the Govt do to
decrease unemployment?




          200    Check Answer
Increase spending




          200
  When the Govt practices
expansionary Fiscal Policy, what
       happens to taxes?




            400      Check Answer
Decrease Taxes




    400
What is supply side Economics?




                600     Check Answer
Govt provides incentives for
producers to increase aggregate
demand.



               600
   If GDP decreases and
  unemployment rises in 2
  quarters, what would the
appropriate fiscal policy be?


             800     Check Answer
Decrease taxes & increase spending




               800
When might demand-side Fiscal
policy prove politically unpopular?




               1000 Check Answer
When the gov't attempts to
  raise taxes during an
expansion & lower Taxes
  during a contraction


           1000
Who confirms the FED’s board
       of governors?




            200    Check Answer
Senate




200
Who appoints the FED
 board of governors?




        400   Check Answer
President




   400
Who approves the Fed
     decisions?



        600    Check Answer
No One




   600
  To increase the money
supply, how does the FED
   utilized the 3 tools?



         800    Check Answer
1. Lower DR
2. Lower RR
3. Buy Securities



                800
What type of Monetary policy is used when
the Fed buys securities?




                 1000 Check Answer
Expansionary
Monetary Policy



      1000
What is a deficit budget?




         200     Check Answer
Spending > Revenue




        200
What is a surplus budget?




           400    Check Answer
Revenue > Spending




        400
What is a balanced budget?




          600    Check Answer
Spending = Revenues




       600
What type of budget have
we had since 2001?




            800     Check Answer
Deficit Budget




    800
 1.What is the gov't main
   source of revenue?
2.Give an example of Govt
        spending?

          1000 Check Answer
       1.Taxes


2.Defense, education,
  infrastructure, social programs


              1000
Who primarily conducts fiscal policy?




                200       Check Answer
President/Congress




      200
    If GDP decreases and
  Unemployment rises in 2
 quarters, what would be the
appropriate Monetary policy?



             400    Check Answer
Decrease RR and
decrease DR, Buy
    Securities



       400
What phase of the business
cycle are we currently in?




           600    Check Answer
Contraction/Trough




       600
Give an example of Fiscal and
monetary policies counteracting
each other?




              800      Check Answer
Increase gov't spending &
      sell securities
   Answers may vary


           800
Receiving an unemployment check is
an example of________ fiscal policy
and is a ________ stabilizer.




                 1000 Check Answer
Expansionary,
Automatic



      1000
Government cuts personal income tax
rates is an example of ________ fiscal
policy & __________ spending .




                  200      Check Answer
Expansionary & Discretionary




               200
Government raises Income taxes this is
an example of _________ fiscal policy.




                 400     Check Answer
Contractionary




           400
Transfer payments such as social security
and welfare are an example of ________
_______.




                 600      Check Answer
Automatic Stabilizers.




                 600
What fiscal policy would not help solve
the unemployment problem?




                 800      Check Answer
Higher Taxes




               800
List 4 examples of Automatic
Stabilizers




               1000 Check Answer
Unemployment, Social Security, US
Income Tax System, Medicaid/Medicare
(Answers may vary)



                1000
 A      B          C      D               E



200    200        200    200            200

400    400        400    400            400

600    600        600    600            600

800    800        800    800            800

1000   1000       1000   1000           1000

       End Game                 Final Jeopardy
       Final Jeopardy
  Given the current economic
 conditions, what would be the
appropriate monetary and fiscal
           policies?
What are limits to these policies?

                      Check Answer
        Final Jeopardy
1. Monetary= Lower RR, Lower DR,
   Buy Securities
  Fiscal = Tax cuts & increase spending


2. FED can’t force banks to loan money
  Gov’t can’t force people to spend the
  money they give them (tax cuts)

								
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