the national economy

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The National Economy Federal Reserve System

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The National Economy. Federal Reserve System. I. Economic Indicators. Show health of the economy Gross Domestic Product (GDP) Value of all goods and services produced in a country Per Capita GDP = GDP per person Standard of Living – Cost to live somewhere comfortably - PowerPoint PPT Presentation

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Page 1: The National Economy

The National Economy

Federal Reserve System

Page 2: The National Economy

I. Economic Indicators

• Show health of the economy– Gross Domestic Product (GDP)

• Value of all goods and services produced in a country• Per Capita GDP = GDP per person

– Standard of Living – Cost to live somewhere comfortably

– Consumer Price Index- Change in price over time

– Employment Rate– National Debt

Page 3: The National Economy

Tax and Spend Liberals?

Page 4: The National Economy

II. Federal Reserve System

• Created in 1913 to regulate economy through Money Supply– Privately owned by

members– Fed Chairman

(appointed for 4 year term)

• Ben Bernanke

Page 5: The National Economy

III. Levers of Control-Monetary Policy

• Sets Reserve Requirement– Low Reserve – Increase money supply (loose)– High Reserve—Decrease money supply (tight)

• Sets Interest Rates– Some rates encourage people to save (tight)– Some rates encourage people to spend (loose)

Page 6: The National Economy

IV. Meaning?

• The Fed can hit the brake or the gas on the economy– More money in circulation drives the economy

• More spending = More profits, more production, more jobs!

– Less money slows the economy• Less spending=less profits, less production

Page 7: The National Economy

V. Why would the fed EVER slow the economy???

• Supply and Demand!!! – The more money people have, the less it’s

worth• Loose Monetary Policy usually leads to inflation

(rising prices)• Inflation leads to higher Standard of Living• **Think about a resort town: are prices for everyday

goods higher there? YES! People can afford it

• The Fed’s job is to keep the economy stable-avoid major slowdowns (This means it has to avoid rapid expansion, too)

Page 8: The National Economy

Who controls the economy?

• Government– Fiscal Policy– Print Money– Taxes– Investment

• Includes tax incentives for businesses

• FED– Monetary Policy– Interest Rates– Reserve Requirement

Page 9: The National Economy

Rustbelt

Page 10: The National Economy

Sunbelt

Page 11: The National Economy

Silicon Valley

Page 12: The National Economy

Research Triangle Park