( ): by on and. ,,, and of. ( ): by levels of on and. . Includes on the,, and. ( - ): by people on. and (, or ) minus by people the on

Transcription

1 Gross Domestic Product (GDP) Formula for GDP GDP = ( - ) ( ): by on and. Includes on things such as cars, food, and visits to the dentist. ( ): by on,,,, and of. ( ): by levels of on and. Includes on the,, and. ( - ): by people on and (, or ) minus by people the on and (, or ). Real & Nominal GDP is GDP measured in prices. It account for from year to year. is GDP expressed in, or, dollars. takes into account from year to year. Price level increase from year to year is known as!

2 Broad Social Goals Economic : allocating productive resources to produce the goods and services that people want and using inputs in a manner that keeps as as possible. 2. Economic : what is. Economic and have to be evaluated in terms of what people think is right or wrong. Equity issues often arise in dealing with the of i and. To some, equity means providing equal ; to others, equity means equal. 3. Economic : allowing ( ) to decide for themselves how they will spend their, generate income, and ultimately to decide how they will their own.

3 4. Economic : increasing the of goods and service over time. Economic is measured by changes in the level of real Gross Domestic Product (rgdp). A target annual growth rate of percent to percent in is generally considered and. 5. Economic : protecting,, and from risks that exist in society. Each society must decide from which ndividuals can and should be protected, and whether,, or the should provide or pay for this protection. 6. Economic : no massive in the of a nation s economic system as well as avoiding and. Economic stability is accomplished through &. Fiscal Policy Fiscal Policy is the coordinated function of the & branches of government. What is Fiscal Policy? The flow of into and out of the economy as a result of and has a large impact on the economy. Fiscal Policy is the federal government s use of and to promote economic.

4 Fiscal Policy and the Federal Budget The federal budget is a document indicating the of the government expects to for a certain year and authorizing the amount the government can that year. The federal government prepares a new budget for each. A fiscal year is a twelvemonth period that is the same as the January December year. Fiscal Policy and the Economy The level of government can be changed to help or the output of the economy. Policies: Fiscal policies that try to are known as policies. Policies: Fiscal policies intended to are called policies. Limits of Fiscal Policy Difficulty of Changing Spending Levels: In general, significant changes in must come from the small part of the federal budget that includes. Predicting the Future: Understanding the state of the economy and future economic performance is very difficult, and economists often. This lack of agreement makes it for lawmakers to know when or if to enact changes in policy. Delayed Results: Even when policy changes are enacted, it takes for the changes to take effect.

5 Political Pressures: Pressures from the can hinder policy decisions, such as decisions to or. Coordinating Fiscal Policy For fiscal policies to be effective, various and of government must plan and work, which is sometimes difficult. Federal need to take into account and economic differences. Federal fiscal policy also needs to be with the policies of the. Monetary Policy Changes in the of and the of initiated by a nation s to promote,, and reasonable rates of. Monetary Policy is facilitated by the. Regulating the Money Supply The is best known for its role in the money supply. The monitors the money supply and takes appropriate action to achieve three goals specified by Congress:,, and - in the United States. Factors That Affect Demand for Money 1. Cash (Cash makes transactions easier.) 2. rates (Higher lead to a decrease in demand for cash.)

6 3. levels in the economy (As prices rise, so does the demand for cash.) 4. General (As income rises, so does the demand for cash.) Stabilizing the Economy The monitors the and the for money in an effort to keep stable.