Government and Economic Policy

Government and Economic Policy
To do this the government uses its most powerful economic agency, called __________________, or The _____. It affects the money supply by raising or lowering _______ _______, in order to change economic activity. The Fed is headed by a Chairman, ____ __________, who is very powerful. Interest Rates- amount of money, or _____, a borrower must pay to borrow money from a bank or financial institution. (Indicated by an _____ %) In general, high interest rates usually make it more _____________ for everyone in our economy, including individuals and businesses.

When the FED wants to _________business activity, it will ________the money supply, which ________interest rates, which makes it easier for individuals and businesses to ________ money, to buy goods/services and to produce goods and expand businesses. Called a ______ or _____ money period. (The FED would do this if the economy were slow or slowing down) When the FED wants to slow business activity, it will __________the money supply, which will _______ interest rates How the Federal Reserve Works - Video - TIME.com

The FED uses 3 policy tools to affect monetary policy. 1. __________ rate- interest rate that the Fed charges banks to_________money. 2. _________ requirement- the amount or percentage of money that banks must hold in reserve against their deposits. 3. ______ _________ operations- the purchase and sale of U.S. ________ Each of these tools allows the FED to easily raise or lower _________ rates.

INFLATION Inflation is basically an _________ in the prices of goods and services. Inflation is ________ but the _____ tries to control the rate at which it occurs. ____% a year is considered normal. Inflation is defined as an ________ in ______ caused when there is too much ______ available to ___ too few goods. The ____________ will try to control inflation Eventually the ______ __ _____for ALL will ________ because of inflation

Measuring the Economy The government measures the economy using Gross Domestic Product or GDP. Gross Domestic Product is the total ______ of the goods and services________by the nation's businesses and individuals in _____ year. It is the most important economic ________used by the government. United States GDP is currently around 14,000,000,000,000($14 __________) This figure should go ____ each year if we have a strong & ________ economy. Japan is #__ in with a GDP of around $__ trillion, then China with $_____ trillion

Measuring the Economy Other economic indicators or measures used to measure the economy are: _________ income- the total amount of _______ received in one year by all the families and individuals in our country. _____________ rate- the percentage of workers that are unemployed, or out of work, at any particular time. (__% to ___% is considered normal) __________ of living- quality of citizen’s lives based upon the amount of goods and services they can _________ and amount of ________ time they have. _________________Average-an average of business stocks for all corporations based upon an index that reflects the prices of stocks for a group of corporations. The _________ the number, the better most businesses are doing.

Monopolies ___________- one company or group of people that control all or most of a good or service Monopolies create 3 problems: 1. No ___________ for these businesses meant low quality at high prices. 2. A large ________ of resources. 3. A threat to ____________ values Monopolies are formed in 2 different ways: Through mergers or trusts. 1. _________-2 or more companies agree to join into one larger company. (XM radio and Sirius satellite radio are merged into one company)

Monopolies 2. ________- this is when several companies remain separate, but have the _______ people serving as their Board of _________- the people who make the decisions for the company and how it will be run. An example of a trust was ________ ____, who owned separate companies that controlled the drilling, shipping, refinery, and retail outlets for gasoline. Monopolies still exist today, but are considered _________ monopolies, because they are regulatedby the government.

Government and Economic Policy