UNC-Chapel Hill ECON 101 - Supply-Side Equilibrium: Fiscal Policy; Monetary Policy and the Great Recession (3 pages)

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Supply-Side Equilibrium: Fiscal Policy; Monetary Policy and the Great Recession



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Supply-Side Equilibrium: Fiscal Policy; Monetary Policy and the Great Recession

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Supply-Side Equilibrium: Fiscal Policy; Monetary Policy and the Great Recession (combination of both lecture 17 and 18)


Lecture number:
16
Pages:
3
Type:
Lecture Note
School:
University of North Carolina at Chapel Hill
Course:
Econ 101 - Introduction to Economics
Edition:
1

Unformatted text preview:

Econ 101 1st Edition Lecture 16 Supply Side Equilibrium Fiscal Policy Monetary Policy and the Great Recession Chapter 28 Fiscal Policy is the government s plan for spending and taxation It is designed to steer aggregate demand in some desired direction Automatic Stabilizer is a feature of the economy that reduces its sensitivity to shocks such as sharp increases or decreases in spending Are there more examples of stabilizers One example of an automatic stabilizer would be Unemployment Insurance provided by the government While it is bad when someone loses their job having this Insurance limits the blow and allows for the unemployed person to not lose all methods of spending Chapter 30 Monetary Policy refers to actions that the Federal Reserve System takes to change interest rates and the money supply It is aimed at affecting the economy Central Bank is a bank for banks The United States central bank is the Federal Reserve System Central bank independence refers to the central bank s ability to make decisions without political interference Open market operations refer to the Fed s purchases or sales of government securities normally Treasury bills through transactions in the open market Buy Bonds think big bucks moves the Money Supply to the right Sell Bonds think small bucks moves the Money Supply to the left Federal Funds Rate is the interest rates that banks pay and receive when they borrow reserves from one another Bank to Bank Discount Rate is the interest rate the Fed charges on loans that it makes to banks Fed to Bank Risk of Default on any loan or security is the risk that the borrower may not pay in full or on time These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Market interest rates generally include a risk premium spread over Treasuries to compensate the lender for the probability of loss if the borrower fails to repay the loan in full or on time



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