Monetary Policy notes
Introduction to Monetary Policy
Reemphasize Chapter 13's points: The Fed's Board of Governors
formulates policy, and twelve Federal Reserve Banks implement policy.
The fundamental objective of monetary policy is to aid the economy
Nominal vs Real GDP notes
Nominal Versus Real GDP
Nominal GDP is the market value of all final goods and services
produced in a year.
GDP is a (P Q) figure including every item produced in the
economy.Money is the common denominator that allows us to sum
Inflation: Defined and Measured
Inflation is a rising general level of prices (not all prices rise at
the same rate, and some may fall).
To measure inflation, subtract last year's price index from this year's
price index and d
Unemployment (One Result of Economic Downturns)
Types of unemployment:
Frictional unemployment consists of those searching for
jobs or waiting to take jobs soon; it is regarded as
somewhat desirable, because it indicates that there is
Households as Income Receivers notes
Households as Income Receivers
Functional distribution of income is shown in Figure 51.(This figure is
based on NI-National Income.)
Wages and salaries are 70 percent of total.
Proprietors' income (income to selfempl
Business Population notes
The Business Population
physical establishment where production or
distribution takes place (factory, farm, store).
business organization that owns and operates the
plants.(The legal entity.)
Market System notes
The Market System at Work
The market system is made up of millions of individual decision
makers who make trillions of decisions all of which are attempting to
maximize their individual or business self-interest.
The market is a mechan
Fiscal Policy notes
One major function of the government is to stabilize the economy
(prevent unemployment or inflation).
Stabilization can be achieved in part by manipulating the public
budget-government spending and tax collections-to incre
Public Sector notes
The Public Sector: Government's Role
Providing the legal structure:
Government ensures property rights, provides enforcement of
contracts, acts as a referee and imposes penalties for foul play.
Government intervention improves the allo
Gross Domestic Product
GDP is the monetary measure of the total market value of
all finalgoods and services produced within a country in one year.
Money valuation allows the summing of apples and oranges;
money acts as the common denominator.