bbvista pp economic and industry analysis

Bbvista pp economic and industry analysis

Info iconThis preview shows page 1. Sign up to view the full content.

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

Unformatted text preview: oods and services. A tax cut Supply shock An event that influences production capacity or production costs. Higher levels of education ⇒ productivity↑ ⇒ production costs↓(perhaps). Government influences Government influences Fiscal Policy ­ government spending and taxing actions Stimulating the economy through Gov spending Slowly implemented Gov purchasing multiplier 1:1 Taxes ⇑ ⇒ Demand ⇓ Taxes ⇓ ⇒ Demand ⇑ but because of savings by less than 1:1 US Total Debt US Total Debt Source: National Debt: CNBC Explains, Wednesday, 29 Jun 2011 Limitations of fiscal policy Limitations of fiscal policy Recognition delay Administrative delay Impact delay Monetary Policy ­ Monetary Policy manipulation of the money supply to influence economic activity (FFR) Tools of monetary policy Open market operations( federal funds rate) Discount rate Reserve requirements Inflation Inflation Persistent P⇑ on most goods and services Demand- pull inflation results from MS ⇑ , Gov ⇑ , Consumer ⇑ GDP ⇑ above full employment GDP Will persist until Fed tightens money Cost - Push Inflation: Results...
View Full Document

This document was uploaded on 02/05/2014.

Ask a homework question - tutors are online