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Economics (Macroeconomics ((Policy Tools of Federal Reserve, adjust the…

- - - - FICA- federal insurance contribution tax
      - Net Pay - what people actually make after deduction
    - - voluntary deductions - health care, union, life insurance
  - - - What is left out of GDP?
        
        does not include illegal activities
        
        does not include non market activities
        
        does not include secondary sales
        
        does not count buying stock
        
        does not include intermediate ingredients and outsourcing
  - - - Government Recession Tool Kit
      - Fiscal Policy: changes to taxes and spending money
      - this is done by congress and the president
      - Monetary Policy: changes to supply of money
      - the Federal Reverse does this
      - do this by changing interest rates and other ways of encouraging spending
      - Keynes- recession is caused by animal spirits and the logic of paradox and thrift
        
        hold on to our cash and don’t take risks when we get afraid
        
        markets therefore need to be steered by government
        
        Hayek - government actions make recessions worse
        
        basically a super high when one is hungry
        
        market will readjust itself on its own
        
        he was against Fiscal and Monetary Policy
    - - fiat money: the currency used has nothing standing behind it except the fact of legal tender, what US uses
      - gold standard: the money was backed by gold
    - - Federal Reserve - central bank of the united states, it controls the money supply
      - it is not under current political control
      - 7 governors, with 14 year turns
      - also supervise all banks, credit unions, etc
      - it is technically a bank for banks
      - 12 branches around the country of the Fed
      - The Fed job is to adjust the supply of money in order to accomplish:
        
        maximum employment
        
        stable prices- no inflation/deflation
        
        moderate long term interest rates
        
        Fed Chairs - one of seven governors that leads the federal reserve
        is sometimes appointed by executive branch depending on opening
- - - - Law of Supply: higher prices people choose to produce more, lower prices people choose to produce less
        
        Supply Curve - how much of a good would be supplied or produced at each possible price
        
        Supply Shifters
        
        cost of production
        
        government policy - tax and subsides
        
        shortage of inputs
        
        technological change
        
        number of producers/sellers in an area
        
        producers rise = supply will rise
        
        future expectations about price
    - - Demand Shifters
        
        Demand Curve- how much of something people want at a specific price
        
        Elasticity of Demand - we want to know how steep our demand curve should be
        how responsive demand is to change in price
        
        8 more items...
        
        change in population of available consumers
        
        change in income: normal- as income goes up, so does demand, inferior- as income goes up, demand goes down
        
        price of other goods, complements- goods that are used together - pb and j, substitutes - peanut butter vs almond butte
        
        future expectations about price- most people react in a predictable way
        
        consumer information
        
        tastes and preferences