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Economic Policy - Coggle Diagram

- - - - investments by gov in healthcare, defense, education, infrastructure
      - expansionary spending=gov spends a lot during recession
      - contractionary spending=gov reduces spending=control infla
      - more spend=more jobs=more consumer spend=gdp boost
    - - perosnal income tax, sales tax, corp tax
      - low tax=more spare money= more spending
      - high tax=less spend=control infla
      - low taxes=less unemploy=budget deficits (needs to be balanced with spending)
    - - plan of gov's revenue & spending
      - surplus budget=revenue>spending
      - deficit budget=revenue<spending
      - balanced budget=revenue=spending
      - budget tells gov debt levels and how much it needs to burrow from capital markets
    - - amount of loans taken over time
      - borrowing leads to 'crowding out' (less capital for private business to loan, increases interest rates)
  - - - active gov intervention
      - during recession=increase spending, low taxes
      - during booms=lower spending, high taxes
    - - minimal gov intervention
      - advocates monetary policy usage to control infla & recession
- - - - infla low, stable, predictable
      - uses interest rates to control infla & influence exc rates
      - independent of gov
    - - stable+efficient system
      - oversee clearing+settlement systems
      - check domestic+international regulators
      - provide liquidity + lenders of last resort
    - - designs, prints, distributes notes
    - - manages - gov bank acc + payment flows
      - foreign currency reserves
      - federal debt
      - advises gov on interest rates, debt, capital markets
- - - - interest rates charged by banks on each other for one day loans
      - if BOC changes this, affects all other rates (credit cards, mortages)
      - rate up=burrowing expensive, spend less, business invest less = gdp slow
      - rate down=burrowing cheap, people spend more, business invest more, expand=gdp grow
    - - repos
        
        undesired upward pressure on overnight rates=banks give money to banks by buying treasury bills=more money in other banks to give out=rates low
      - reverse repos
        
        undesired downward pressure on overnight rates=banks take money from banks by selling treasury bills=less money in other banks to give out=rates up
    - - drawdowns
        
        pull money out of banks=rates up
      - redeposits
        
        put money into the banks=rates down
- - - - fiscal - more spending, less taxes=jobs created=people spend more=eco grow
      - monetary - rates down=people spend more, business invest=eco grows
    - - fiscal - spend less, high taxes=people spend less=eco slows
      - monetary - rates up=people spend less,burrow less=eco slows
  - - - pros
        
        can target specific towns/provinces
        
        less taxes,=people happy
        
        people understand easily
      - cons
        
        taxes up=people sad
        
        hard project started=diff to stop
        
        spend more=debt high+future interests payments
    - - pros
        
        quick
        
        easy to change
        
        not affected by politics
      - cons
        
        not for specific locations
        
        if people not willing spend=low rates not helpful
        
        rates already low=cant go any lower