Macroeconomic Notes 3-12-08

Macroeconomic Notes 3-12-08 - Fiscal policy is w a budget...

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Macroeconomic Notes 3-12-08 Concept of Fiscal Policy = (G – T) = (S – I) + (m – x) Change in GDP = change in G or T * multiplier 3 Distinct Time Lags: Recognition Lag – kennedy Johnson tax cut. - fiscal drag – if at full employment taxes will create a surplus. Administrative – getting everyone to agree on the same playing field which is very rare and agree to sign it ok great. Then what? Usually takes a while which is why it was so strange that the stimulus package got approved so quickly. Implementation – making it into the real world. Takes time to actually get enforced.
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Unformatted text preview: Fiscal policy is w/ a budget while Monetary Policy is with credit. Monetary Policy: What money is used for? Medium of Exchange: bardering Measure of Value : What’s are your possessions worth? Store of Value : 401K, Savings Account, etc. First Measure of Money: M 1 Money Supply : consists of cash (coins & currency), checks (*), travelers checks (*) M 2 Savings accounts (*), Time Deposits (Small) < $100,000 (*), Money Markets (*) * = liability of the bank...
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