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Unformatted text preview: 1 1 Money, Banking, and the Federal Reserve System ¡ Key Points ¡ Definition and role of money ¡ Benefits of monetary economy ¡ A bit about banks ¡ The financial system ¡ Creation of Money – simple money multiplier ¡ Structure and tools of the Fed 2 In the News? ¡ 3 Course Issues ¢ Registration issues ¢ HW Q&A ¢ Clicker points ¢ REVISED GRADING (syllabus updated in sakai) ¡ AND GRADED ONLINE HW QUESTIONS DUE EACH CLASS. Clicker – 200 points max ¡ HOMEWORK – 100 POINTS, 1.5 X AVERAGE OF THE BEST 7 OF 9 ASSIGNMENTS ¡ Email with problems ¢ Investment Game 1&2 – Questions with hw 5 ¢ How to study/learn/grow wealthy ¢ How to get help ¢ Resumes – next week 2 4 The Keynesian Model ¡ 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 I (or r)=interest rate Ms=money supply ¡ 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) ¡ Shifts in aggregate demand and, sometimes, aggregate supply cause business cycles: recessions/depressions ¡ Aggregate D = C+I+G+X-M ¢ increases in any of these shift aggregate D curve by a multiple ¡ 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 ¢ changes in wages, costs of production, technology shift SR aggregate supply curve ¡ 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-> stabilization purposes - G,T) shifts aggregate demand and thus y,p i....
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This note was uploaded on 03/24/2011 for the course ECON 103 taught by Professor Lin during the Summer '08 term at Rutgers.
- Summer '08