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Concept Map

The Government and Me

Business Cycle

Monetary Policy

Fiscal policy

Government Regulation

  • Expansionary monetary policy includes actions of the Fed that expand, or increase the money supply. Economists associate increasing the money supply with quickening the pace of economic growth and fighting recession.
  • Contractionary monetary policy includes actions of the Fed that contract, or decrease the money supply. Economists associate decreasing the money supply with slowing down economic growth and fighting inflation.
  • The Federal Reserve has three tools of monetary policy to affect the money supply:

Government functions

  • The tools of fiscal policy are taxation and spending.
  • Our government creates a deficit by spending more than the total tax revenue and debt is the total amount government owes. Government can create a surplus by collecting more in taxes than is spent on programs.
  • There are four phases of the business cycle
  • Expansion like the upward climb of the roller coaster. During the expansion phase, Gross Domestic Product, or GDP, is increasing. Usually, this also means that the rate of inflation is increasing while the unemployment rate is decreasing
  • Peak is where production reaches the highest current level. This is a time when the inflation rate is at it’s highest and unemployment is at the lowest.
  • Contraction A period of decreasing economic activity, similar to the downhill part of a roller-coaster ride.During a contraction, unemployment rises while inflation falls.
  • Trough The lowest point of the roller coaster ride and of the business cycle. The trough is the transition from a contraction to an expansion phase and thus the worst point in a period of
  • decline.

- Enforce rules and regulation

- preserve peace and order

- provide services and goods

Attempt to

  • Promote Growth
  • Full Employment
  • Price Stability

3. Open Market Operations—the Federal Reserve’s frequent buying and selling of government securities (bonds), considered the most significant of the three tools.

2. Reserve Requirement—the percentage of a bank’s deposits that must be kept as currency and coin in the bank.

1. Discount Rate—the interest rate the Federal Reserve charges banks to borrow currency.

taxation :

Spending :

Increased spending = increase in economic growth

Decreased spending = decrease in economic growth

Increased taxes = slow economic growth

decreased taxes = increase in economic growth

avoiding both prolonged inflation and deflation.

Price stability :

Full Employment :

the condition in which virtually all who are able and willing to work are employed

Promote growth:

The government can provide a secure environment for doing business through

good laws and financial regulations that prevent cheating, stealing, and corruption.

presented by : group 1 A 8

SHARMA, MAYANK

MIGUEL, CLARISSE MAE

LADERA, JULIESSE ARA

GASPAR, LOVEE ANNE

GARCIA, CHANTAL JADE

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