MONEYCLASS - 1 1 Money Banking and the Financial System ...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 1 Money, Banking and the Financial System ¡ Python / banking? 2 In the News? ¡ 3 Course Issues ¢ Clicker Registration and Update (list) ¢ Online Midterm ¡ will start Wednesday March 10 at 7pm and end Thursday March 11 at 9pm ¡ Covers weeks 1-7 ¡ Study big qs, hw, slides ¡ (H1 – part 2 Thursday 3/11) ¢ Investment Game 1– Clicker Qs next week ¢ How to study/learn/grow wealthy ¢ How to get help ¢ Jeffrey Miron coming 2 4 Where are we? 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 r=interest rate (i if I make a mistake) 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 ¡ 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 ¢ 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-> D → p,y and T->Y-T->C->D etc ¡ 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 ¡ Wealth effect W up->C up->D up->p,y up ¡ Paradox of thrift : S up -> C down ->D and p,y down in SR (LR Sup->I up)...
View Full Document

This note was uploaded on 09/30/2011 for the course ECONOMICS 103 taught by Professor Sheflin during the Spring '08 term at Rutgers.

Page1 / 7

MONEYCLASS - 1 1 Money Banking and the Financial System ...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online