Download Define in your own words Characteristics

How can our leaders help
improve the economy?
News Article: Read and answer
the questions below
1. Which organization is reporting on Obama’s
budget?
2. What are some of the consequences of
having a large national debt?
3. Under which president was the largest
deficit recorded?
4. What is the difference between a deficit and
the national debt? (use your book)
Warm-up: vocab review:
1. A small group of influential leaders rule
politics in this theory
2. Includes taxes and government spending
3. The largest non-discretionary spending
programs
4. The amount of goods and services
produced in a country
5. Tax credit for low-income earners
Upcoming assignments
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Policy presentation question
Unit 5 grade savers
X-tra credit
Policy take-home quiz 4/25-26
AP Content Area 5
A. Policymaking in a federal system
C. The role of institutions in the enactment of
policy
E.Linkages between policy processes and the
following:
1. Political institutions and federalism
2. Political parties
3. Interest groups
4. Public opinion
EQ’s
1. What is the difference between
regulation and deregulation?
2. What is monetary policy and
who runs it?
3. How can interest groups,
parties, and institutions affect
the policy process?
Regulate or Deregulate?
Regulation- “hands
on” --government
intervention (rulemaking) regarding
prices, subsidies,
standards,
competition, safety
rules etc.
Deregulation- “Hands
off”– decrease
regulation and let
the market work
(laissez-faire)
Budget Hero
• What was your
biggest move?
• Would it be
politically popular?
Why do we have deficits?
Are
attitudes
changing?
Frayer Models- Pick one
1.
2.
3.
4.
Subsidy
Grassroots
Regulation
Fiscal policy
Define in your own
words
Characteristics
Word
Examples
Non-examples
• What is monetary policy all about? Who
controls it?
• What are the two tools of fiscal policy?
Monetary Policy
Attempts to influence the
economy by changing the
supply of money in the
economy.
Why does the amount of money
matter?
Monetary Policy
• The Federal Reserve
System (The Fed)
• Controls monetary
policy
• central banking
system created by
Congress in 1913 to
control the money
supply
Monetary Policy
• The Federal Reserve
System (The Fed)
• 12 District banks
• 7 member Board of
Governors appointed
by the president and
confirmed by the
Senate
Monetary Policy
Why does the amount of money
matter?
1. Can influence inflation
2. Can influence interest rates
– more money=lower interest rates
– less money= higher interest rates
Interest
• Payment made for the use of
borrowed money
• High interest rates discourage
spending
–(moves AD curve left)
• Low interest rates encourage
spending
–(moves AD curve _____)
• How does the money
supply influence
interest rates?
Supply + Demand for Money
Price
Demand
Quantity
Supply + Demand for Money
Price
Supply of
Money
Demand
Quantity
Supply + Demand for Money
Price
Supply of
Money
Interest
Rate
Demand
Quantity
Supply + Demand for Money
Price
Interest
Rate1
S2
Interest
Rate 2
Demand
Quantity
The Fed’s 3 Tools of Monetary
Policy
1. Reserve Requirements
2. Discount Rate
3. Open Market Operations
The Fed’s Tools of Monetary
Policy
Open Market
Operations
– The Fed buys and sells
Treasury Bonds
– When the Fed buys
bonds, it increases the
money supply
– When it sells bonds, it
contracts the money
supply
Monetary Policy
Expansionary
• Put more
money into the
economy
Contractionary
• Take money
out of the
economy
Monetary Policy
• By controlling the money
supply, the Fed attempts to
steer a course between
• Unemplyment and
• Inflation
Review
1. What is the Fed?
2. How does the Fed influence the
economy?
3. What type of policy would you
recommend for the Fed right now?
4. Why put the Fed in charge of
monetary policy? Why not have
Congress do it?
Examples of Linkages
Choose a public policy
• For that particular policy identify and
explain
A.Interest group action
B.Political party action
C.Bureaucratic agencies involved
How do elections affect all of the above?
Draw a diagram or flow chart
to show connections between
IG, Parties, Bureaucracy and
policy
Economic Policy FRQ
Fiscal policy and monetary policy are two tools used by the federal
government to influence the United States economy. The executive
and legislative branches share the responsibility of setting fiscal
policy. The Federal Reserve Board has the primary role of setting
monetary policy.
(a) Define fiscal policy.
(b) Describe one significant way the executive branch influences fiscal
policy.
(c) Describe one significant way the legislative branch influences fiscal
policy.
(d) Define monetary policy.
(e) Explain two reasons why the Federal Reserve Board is given
independence in establishing monetary policy.
EQ’s
1. What is the difference between
regulation and deregulation?
2. What is monetary policy and
who runs it?
3. How can interest groups,
parties, and institutions affect
the policy process?