Download Monetary Policy

Bell Ringer
• This helps to understand the US debt:
• U.S. tax revenue: $2,170,000,000,000
• Fed budget: $3,820,000,000,000
• Deficit: $ 1,650,000,000,000
• National debt: $14,271,000,000,000
• Recent budget cut: $38,500,000,000
Please put your
Budget Simulations HW
in the bin!
• Let’s remove 8 zeros and pretend it’s a household budget:
• Annual family income: $21,700
• Money the family spent: $38,200
• New debt on the credit card: $16,500
• Outstanding balance on the credit card: $142,710
• Total budget cuts: $385
• In your opinion, why are American politicians still avoiding tackling the
U.S. debt? Think about how spending cuts (welfare for those in poverty &
the elderly, roads/infrastructure, education, research, etc.) and tax hikes
would affect our everyday lives.
• http://www.usdebtclock.org/
US Executive 3
Monetary Policy & Budget Process
Today we will …
Objectives
Agenda
• Review executive orders,
impeachment & succession.
• Describe the steps in creating
the US national budget.
• Explain the role of The Federal
Reserve in monetary
policymaking.
• Compare/contrast fiscal &
monetary policy.
1. Presidential Odds & Ends
2. Fiscal Policy - Creating US
National Budget slides/notes
3. Monetary Policy – The Fed
video & questions
4. Closure - Fiscal & Monetary
Policy FRQ
HW:
• Foreign Policy RQs (1/30)
• Topic Statement (’d 1/30)
Executive Orders
• A rule or regulation issued by
the President that has the
force of law.
• Congress acts in response to or
in anticipation of executive
orders (preempts and
compromises)
Impeachment
• The House can “impeach”
the President.
• The Senate conducts a trial
& votes on impeachment.
• The Supreme Court Justice
presides over the trial.
• Presidents:
1.
Andrew Johnson acquitted
2. Bill Clinton - acquitted
▫ Nixon resigned before
impeachment
Check for understanding
• Specifically explain how a president can be
removed from office. Provide at least one
historical example of this process being used.
Economic Policy
Overall goal is to regulate & ensure the stability of the economy.
Fiscal Policy
Goal: put more $ in people’s
pocket
 Manage the economy by
controlling taxing & spending.
 How can the Pres. influence?
 How can the Congress
influence?
Monetary Policy
Goal: regulate money supply to
increase or decrease the nations
level of business
 We want a productive
growing economy but it can’t
grow too fast
 Inflation!
Inflation
• When the value of money goes down. This means that it
costs more money to buy products.
• The more money there is out there being spent, the less
the money is worth. The supply is high, thus the value is
comparatively lower.
• What this also means is that people are spending, and
this is good.
• Proper balance between a healthy amount of spending
and money in circulation & an acceptable level of
inflation.
• Economists have placed "healthy" inflation at 2 - 3%.
This shows spending growth and expansion, any more
and we begin to worry.
Fiscal Policy Actions
▫ Raising & lowering taxes
▫ Spending
1. Mandatory Spending – obligated by previously
enacted laws
 Entitlements (ex: Social Security, Medicare)
 Interest on the debt
2. Discretionary Spending – controlled thru regular
budget process
•
•
•
•
Defense budget
Education
Environmental Protection Agency
Department of Veterans Affairs
Social Security & Medicare as % of GDP
How National Budget is Prepared
Federal Reserve Video – 14 min.
https://www.youtube.com/watch?v=KN3kD4T3ltY&feature=re
lated
Fiscal & Monetary Policy FRQ