Unit 5 Overview Guide (Learning Targets, Essential Questions, & key concepts)
unit_5_overview_guide.docx | |
File Size: | 20 kb |
File Type: | docx |
The Federal Reserve is our nation's central bank, created in 1913 by Congress with the passage
of the Federal Reserve Act. It is owned by member banks (not Congress).
The Federal Reserve has many responsibilities, such as check clearing, regulating holding companies,
overseeing bank mergers, passing consumer legislation and MOST IMPORTANTLY, conducting
Monetary Policy. (www.federalreserve.gov)
Monetary Policy is conducted by the Federal Open Market Committee (FOMC), in order to keep prices
stable and the economy healthy. It involves expanding or contracting the money supply to affect the
cost & availability of credit. There are three main tools used to conduct MP:
1) The Reserve Requirement - the amount of $ a bank must keep on hand and not lend out.
2) The Discount Rate - the rate member banks are charged on short term loans from the Fed.
3) Open Market Operations - the buying/selling of government securities (bonds).
See the link to our MP tool chart below to help review how these tools are used to affect the cost and availability of credit. They are used differently depending on if we are trying to avoid inflation (rise in the general level of prices) or recession (too slow of growth in the economy)
of the Federal Reserve Act. It is owned by member banks (not Congress).
The Federal Reserve has many responsibilities, such as check clearing, regulating holding companies,
overseeing bank mergers, passing consumer legislation and MOST IMPORTANTLY, conducting
Monetary Policy. (www.federalreserve.gov)
Monetary Policy is conducted by the Federal Open Market Committee (FOMC), in order to keep prices
stable and the economy healthy. It involves expanding or contracting the money supply to affect the
cost & availability of credit. There are three main tools used to conduct MP:
1) The Reserve Requirement - the amount of $ a bank must keep on hand and not lend out.
2) The Discount Rate - the rate member banks are charged on short term loans from the Fed.
3) Open Market Operations - the buying/selling of government securities (bonds).
See the link to our MP tool chart below to help review how these tools are used to affect the cost and availability of credit. They are used differently depending on if we are trying to avoid inflation (rise in the general level of prices) or recession (too slow of growth in the economy)
Monetary Policy Chart (explains how the three tools are used to affect the cost & availability of credit)
monetary_policy_chart.doc | |
File Size: | 26 kb |
File Type: | doc |
ECONOMIC INDICATORS
Economic Indicators help measure the health of our overall economy. There are many economic indicators, including employment/unemployment rates, the Consumer Price Index (CPI), the Gross Domestic Product (GDP), and the Gross National Product (GNP).
The GDP is the best measure overall of a nation's economy. You want to see a + GDP. IT is measured quarterly. Real GDP is adjusted for inflation, current GDP is not. GDP measures the productivity of companies within a nation's borders (may be a foreign owned company too) while GNP measures the productivity of American companies outside the U.S.
The CPI measures the change in prices of goods in a variety of categories. The Bureau of Labor Statistics measures for inflation (by taking a sampling of goods from these categories. Check out this really cool
http://www.bls.gov/data/inflation_calculator.htm (if link does not work, copy and paste into your address bar)
Economic Indicators help measure the health of our overall economy. There are many economic indicators, including employment/unemployment rates, the Consumer Price Index (CPI), the Gross Domestic Product (GDP), and the Gross National Product (GNP).
The GDP is the best measure overall of a nation's economy. You want to see a + GDP. IT is measured quarterly. Real GDP is adjusted for inflation, current GDP is not. GDP measures the productivity of companies within a nation's borders (may be a foreign owned company too) while GNP measures the productivity of American companies outside the U.S.
The CPI measures the change in prices of goods in a variety of categories. The Bureau of Labor Statistics measures for inflation (by taking a sampling of goods from these categories. Check out this really cool
http://www.bls.gov/data/inflation_calculator.htm (if link does not work, copy and paste into your address bar)