MONEYCLASS - Money, Banking and the Financial System Python...

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1 1 Money, Banking and the Financial System s Python / banking? 2 Is Money the Root of All Evil? s A. yes s B. no s George Bernard Shaw 3 In the News?
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2 4 Course Issues b Clicker Registration – if not, must see me b Gradebook/ emails b Online Midterm s One Hour Window – starting Tuesday 10/19 6pm thru Thursday 10/21 6pm. s Covers weeks 1-7 s Study big qs, hw, slides b Investment Game 1 b How to study/learn/grow wealthy b How to get help b Math & Actuarial Career Day 10/8 b b SAS Majors Fair 10/20 b ODE Friday 5 Where are we? The Keynesian Model s P=overal level of prices, y=real GDP=output=income C=consumption I=investment in plant and equipment G=government spending X=exports M=imports Y-T=disposable income r=interest rate (i if I make a mistake) Ms=money supply s Aggregate Demand & Supply (D&S) determine y (y=real output=real gdp; real means it measures physical production=output=income) and P (aggregate price level and inflation) s Shifts in aggregate demand (and sometimes aggregate supply) cause business cycles: recessions/depressions s Aggregate D = C+I+G+X-M b increases in any of these shift aggregate D curve by a multiple s Later - Short-run aggregate S curve reflects wages, costs, technology , etc. An decrease in aggregate demand in the short-run will result in decreased production and output. – a movement down along the aggregate supply curve b changes in wages, costs of production, technology shift SR aggregate supply curve s Fiscal policy (changes in federal government spending and/or taxing for stabilization purposes - G,T) shifts aggregate demand and thus y,P i.e. G-> D p,y and T->Y-T->C->D etc s Monetary policy : Money Supply (controlled by Fed) increases -> interest rates fall -> Investment (in plant and equipment) increases -> aggregate Demand increases (by a multiple) -> output and prices increase i.e. Ms up->r down->I up->agg D up->P,y up s Wealth effect W up->C up->D up->p,y up s Paradox of thrift : S up -> C down ->D and p,y down in SR (LR Sup->I up) 6 Advantage of a Money Economy? s
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MONEYCLASS - Money, Banking and the Financial System Python...

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