I will also be using this blog to
introduce my students to helpful websites that pertain to the topics we are
covering in class.
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| Illustration courtesy of St. Louis Federal Reserve Bank |
On this opening blog post I would like to introduce the
students to the Microeconomics, Macroeconomics, and Current Economics videos
that are available on the Khan Academy website. The following videos summarize what
we are currently covering in class and supply some supplemental information on
the supply of money which we have not discussed. It is important that these two
videos be viewed in order (i.e. watch #1 before watching #2) since #2 picks up
where #1 left off.
Using the link below, you'll find a way to subscribe to this blog, which will deliver new postings directly to your e-mail. Or you can bookmark the page for easy retrieval. I do want to hear from you, so feel free to click the comment button below to let me know what you think.
I am planning to post a new blog entry around once every week, so stay tuned for my next post.
Thought I would throw another test in the mix. Your page has a nice look to it:) I had to sign in my google account. Good thing I had one.
ReplyDeleteMs. Stewart, thanks for checking out my new blog. I did originally have it set up incorrectly to restrict posts to people who had accounts but that mistake has now been corrected.
Deletehi mrs. holowecky
ReplyDeleteHello, Megan. Thanks for helping me to test out the new blog. :)
DeleteHannah B./Seq. B/Ext. Credit
ReplyDeleteThese videos nicely summarize the facets of monetary and fiscal policy and discuss their important and unique roles in the realm of national finance.
Monetary Policy: this deals with the Fed and its role in printing money. This central bank in essence buys debt and lends money and as a result, shifts the supply curve to the right. Through the act of printing money and buying debt, there are two results: interest rates go down and consumers decide to borrow more money. Consumers know that as they borrow more; they will get back more in return.
Fiscal Policy: This addresses three main aspects of the government as far as tax revenue, spending and access to debt markets. When the government issues treasury bills/bonds, you essentially lend money to the government so that they may finance their debt. Increasing spending directly leads to an increase in demand which translates to economic growth. This is why the government seeks to keep taxes relatively constant, so that consumers will spend more and therefore take on more debt.
Hannah-
DeleteYou may have slightly misunderstood the 2nd video. He is talking about decreasing taxes and the government taking on more debt, not consumers taking on more debt.
However, you have still earned your 5 extra credit points. :)
The videos were talking about monetary and fiscal policy. It talks about the importance of them both in the economy. Monetary Policy is basically printing or not printing money. The Fed can print money as it sees fit. It also can buy debt or lend money to other banks. When they print money and buy debt the interest rates will go down and this will get people to borrow more money.
ReplyDeleteFiscal Policy has to do with the government spending. The government has two main sources of revenue Taxes, and borrowing money. When the government spends more money the debt goes up. Also when the government lowers taxes it will cause more debt.When the government lowers taxes the people have more money to spend on other things. In both cases though, the GDP will go up.
You have summarized some of the basic points. Good work, Abbie. Five extra credit points will be added to your grade.
DeleteThis explains monetary and fiscal policy in a really good way for me especially and it shifts the aggregate demand curve Alison h. Seq. d
ReplyDeleteAlison, you need to summarize what you learned from the videos. I will give you 3 extra credit points for this attempt. If you want the other 2 points, watch the videos again and summarize the main points as a reply to this post.
DeleteMonetary policy: The central government prints money, mostly electronically, to then lend out to consumers.
ReplyDeleteThis causes interest rates to decrease; with lower interest rates, consumers will borrow more money and invest it intot he economy.
Fiscal policy: the government uses money from taxes and "debt" from consumers. When taxes are held constant but government spending increases, debt also increases; however, GDP will increase. When spending is held constant but taxes are decreased, debt increases; GDP will increase because consumers have more money in their pockets to spend.
Sarah Doyle, seq F
Sarah, your summary shows that you have an understanding of basic monetary and fiscal policy. You have earned your 5 extra credit points. Good job!
DeleteThe videos above discuss the different properties and functions of Monetary and Fiscal Policies.
ReplyDeleteMonetary: Prints money, done by the central bank (Federal Reserve in US). Buys debt (lends out money). This increases supply of money. Shifts supply curve of money to the right. Prints money to increase supply of money to be lend that lower interest rate which increases willingness to borrow and invest money
Fiscal: Directly buying more goods and services. The government uses the taxes and debt to increase spending. To shift the Aggregate demand curve
Government that holds taxes constant and increases spending. Spending goes up. Most government will have to raise debt. In GDP equation, the government spending rises and the rest remain constant. Thus resulting in GDP rise. Alternatively, can hold spending constant and lowering taxes (puts more money with the people) have to take on more debt. In GDP equation, the consumption (consumer) and investment will rise thus resulting in rise in GDP.
Sabrina Alafita SEQ:B
Sabrina, your post shows that you grasped the main points of the two videos. I hope they helped to increase your understanding of the topics. Good work! You have earned your 5 extra credit points.
DeleteThese two videos basically summarized the main concepts on Monetary and Fiscal Policy.
ReplyDeleteIn the first video, it first discussed monetary policy. Monetary policy is very indirect compared to fiscal policy. In monetary policy, money is printed out by the Federal Reserve. Then they lend out money, or buy debt. Then an increase in money supply caused the supply curve to shift to the right (in micro econ terms). These 3 incidents caused interest rates to go down and a shift in aggregate demand (in macro econ terms). This was an expansionary policy. Then, he talked about fiscal policy. Fiscal policy is more direct because the government directly buys goods and services from the economy. Two sources of fiscal policy are taxes, borrowing money, and also spending. Borrowing money meant bringing debt into the market. You need to rationalize debt.
In the second video, he finished up talking about fiscal policy. He created specific scenarios that would increase aggregate demand and also increase real GDP. He used the expediture approach to find it GDP increased or decreased due to consumption, investment, government, and net exports. The expenditure approach is
GDP = C + I + G + NX
Marissa Ozog
Marissa, your post demonstrates your understanding of the main points presented in the videos. Good work! 5 extra credit points are coming your way!
DeleteThe videos taught monatary and fiscal policy and the concepts surrounding them.
ReplyDeleteFiscal Policy: When the government issues treasury bills/bonds, you essentially are lending money to the government so that they can finance the debt they have. By increasing spending it leads to an increase in demand which renders economic growth. This is likely the reason that the government pursues to keep taxes relatively constant, so that consumers will spend more and therefore take on more of their debt.
Jillian Seach
Seq B
Monetary Policy: The role of printing money is controlled by the Fed. The Fed can buy debt and lend money thus shifting the supply curve positively to the right. Through buying debt and printing money, there are two things that can occur: interest rates can go down and consumers can decide to borrow more money. Consumers also know that the more that they borrow the more they will get back in return.
Jillian-
DeleteYou may have slightly misunderstood one of the points regarding fiscal policy. If the government is spending more to increase aggregate demand and keeps the taxes low so that consumers will also spend, the consumers are spending the money on goods and services. They will not be loaning that money to the government (taking on more of their debt). So who will loan the government money to finance the increased government debt? The video didn't really answer that question, but the answer is foreigners (primarily China) in many cases.
At any rate, good attempt. You have earned your 5 extra credit points.
These two videos gave a deeper understanding of both fiscal and monetary policy. Regarding fiscal policy I learned that the banks lending money is essentially lending debt. Monetary policy is also considered the idea to eithe print or not print money. Depending on the supply of money in the economy it will deermine an either high or low interest rate. A high interest rate discourages borrowing whereas low interest rates do encourage spending.
ReplyDeleteFiscal Policy discusses the government spending. The two ways the government comes up with money to spend is either using taxes or loaned money. When the governemnt spends more the debt goes up, the debt also goes up when the interest rates are low. Both of these cases cause GDP to rise.
Abbie Barrera Seq. D
Abbie-
DeleteThe banks lending money is part of monetary policy not fiscal policy. Also, I am not quite sure what you mean when you say that the debt goes up when interest rates are low. Interest rates are more directly influenced by monetary policy than fiscal policy. When the interest rates that the government has to pay to borrow money to finance the national debt are low, that actually helps to lower the national debt not raise it (or more precisely, slows the rate of growth of the national debt).
I will give you 4 extra credit points for this post. Be sure to respond to my next blog post so that you can earn more extra credit.
These 2 videos discussed monetary and fiscal policy as well as what they consist of. Monetary prints money and consists of central bank ( The Federal Reseverve). Monetary buys debts (usually the safest ones) which shifts the supply curve of money to the right. At any given interest rate there is more money and if demand has not shifted, then there is a new equillibrium. When equillibrium interest rates change, so do the interest of people who want to borrow. When borrowing increases, people spend more money and increase aggregate demand. But hwen the Federal reserve decides to print less money, then the opposite happens and aggregate demand decreases. Fiscal policy is the government directly going out and demanding goods and services in the economy. They have 2 sources of money: tax revenue and debt markets.By buying treasury bonds you are essentially buying up the government debts. If the governemnt decides to increase spending but not taxes then debt increases. Which shifts aggregate demand curve to the right. When governemnts debt increases when taxes stay the same but spending increases (which overall increases GDP).
ReplyDeleteAlly, you have summarized the first video well but I do not see that you have mentioned any points from the second video so I will give you 4 extra credit points this time. Be sure to respond to my next blog post so that you can learn more about the unemployment rate and earn more extra credit. :)
DeleteThese two videos have been able to summarize how both monetary and fiscal policy can shift the aggregate demand curve to the right.
ReplyDeleteMonetary Policy- Is basically used in deciding how much or how little money to print, either by actual money in print or digital money. Monetary policy is controlled by the United States’ Federal Reserve and it is used in a more indirect way to reach its goal. The Fed is partly independent and is able to lend money out, which means buying out debt. By doing this, the Fed is increasing supply to be lent out, which means that the interest rate of money also increases and the aggregate supply curve shifts to the right. Thus creating a different equilibrium price for the curve.
Fiscal Policy- Is the U.S Government directly going out and demanding goods and services from the economy. Thus picking from two revenues, Tax Revenue and Debt Revenue or Debt Market. So basically, when the American people buy savings bonds from the Government they are actually lending/loaning money out to them. When more is spent on these savings bonds debt is being “ratcheted up” and soon there is more demand for spending on good and services. And of course, there is also the shifting of the aggregate curve to the right. So the thing to remember about Fiscal Policy is that to hold taxes constant and increase spending the Government must take on or buy more debt, which can lead to GDP rising. GDP can also rise when holding the Government’s spending constant and lowering or decreasing taxes, which will make the Government “take on” more debt.
Veronica, you are right about the Fed's independence and direct control of the money supply. You are also right about monetary policy being a less direct method than fiscal policy of influencing demand. However, when the Fed increases the supply of money that tends to lower interest rates, not raise them.
DeleteAlso, the government does not increase its spending because people are loaning it more money. The government spends more to directly increase aggregate demand (G in the GDP equation) and as a result it must borrow money to pay for this increased spending.
I will give you 4 extra credit points for this post. Be sure to respond to my next blog post to increase your understanding of the unemployment rate and earn more extra credit.
These videos discussed how monetary and fiscal policies shift the aggregate demand right.
ReplyDeleteMonetary Policy- The government prints more or less of money which is done by the Federal Reserve. We lend them money(bonds) which the government uses to buy their debt. When the government keeps taxes low and increases demand, the people will spend and borrow more money.
Fiscal Policy- More direct way of buying goods and services. When the government directly demands goods and services from the economy. Tax revenue and debt markets are the two sources of money. When you buy bonds, you are really buying the government's debt. When the debt increases the aggregate demand cure shifts to the right if the government increases spending but not taxes. GDP rises when the debt goes up because of low intrest rates and when the government spends more so the debt goes up.
The two videos demonstrated how monetary and fiscal policies shift the aggregate demand to the right.
ReplyDeleteMonetary policy- Is the amount of money the government prints which that is done by the FR (federal reserve). They use the money that is lended to them or other wise known as bond and they buy debt with it. This whole concept is supply and demand when the people want to buy more they spend more money and once the depand increases the supply increases and that shifts everything.
Fiscal policy- is when the goverement controls the demand of goods and services because they directly control what is going in and out. When you buy treasury bonds you are technically buying the goverenments debt. There are two sources of money and those are tax revenue and debt markets. What causes the curve to shift is when the government increases spending but not taxes.
Ally Carvalho
ReplyDeleteThe videos demonstrated how monetary and fiscal policies shift the aggregate demand to the right.
The first video was all about monetary policy. Monetary policy is very indirect compared to fiscal policy because , money is printed out by the Federal Reserve. Then they lend out money, or buy debt (known as bonds). Then an increase in money supply caused the supply curve to shift to the right. These 3 incidents caused interest rates to go down and a shift in aggregate demand. This was an expansionary policy.
Then, he talked about fiscal policy. Fiscal policy is where the government directly buys goods and services from the economy. Two sources of fiscal policy are taxes, borrowing money (treasury bonds) and also spending. Borrowing money meant bringing debt into the market. (borrowing money from the people, and eventually owing them later, ie bonds again). The curve shifts because the government increases spending.
In the second video, he finished up talking about fiscal policy. He created specific scenarios that would increase aggregate demand and also increase real GDP. He used the expediture approach to find it GDP increased or decreased due to consumption, investment, government, and net exports.