×

### Let's log you in.

or

Don't have a StudySoup account? Create one here!

×

or

by: Hope Johnson

6

0

5

# The Fed Econ 202

Hope Johnson

Get a free preview of these Notes, just enter your email below.

×
Unlock Preview

These notes cover money and loans: bonds, inflation, private investing.
COURSE
Intermediate Macroeconomics
PROF.
Dr. Gramm
TYPE
Class Notes
PAGES
5
WORDS
CONCEPTS
Economics, Macroeconomics, Money
KARMA
25 ?

## Popular in Economics

This 5 page Class Notes was uploaded by Hope Johnson on Friday September 23, 2016. The Class Notes belongs to Econ 202 at Rhodes College taught by Dr. Gramm in Fall 2016. Since its upload, it has received 6 views. For similar materials see Intermediate Macroeconomics in Economics at Rhodes College.

×

## Reviews for The Fed

×

×

### What is Karma?

#### You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 09/23/16
Loans Wednesday, September 21, 2016 2:04 PM Role of the fed in the Long Run The lower the dollar, the higher the price State of inflation is always a monetary phenomenon. The fed can stimulate the economy in the short run, but hurt it in the long run. In a closed economy: Y= C+I+G C = C ( Y-T ) - mathematical function of disposal income T = Taxes - trans MPC Marginal Prop. To consume I = I (cr) R = real interest rate Real interest rate = nominal interest rate- inflation rate R = I - pi When you take student loans, you want hyper inflation so its essentially cheaper to pay off your loans Market for loanable funds : Saving = Investment Y = C + I + G S= I = Y - C - G S = (Y-T-C) + (T - G) S = private - public savings In the market of loanable funds the interest rate is going to be _________. (amount S = (Y-T-C) + (T - G) S = private - public savings In the market of loanable funds the interest rate is going to be _________. (amount loaned?) Public saving falls, bc gov deficit Interest rates rise, saving and inv. Falls. To finance deficit, the gov. issues bonds. In closed economy, savings equals investment. Come up with what happens…. To the r, s, and I … S and I the same And you move the right, s and I increase As you move to the left, Saving and I decrease Don’t get confused between the effect on saving and the …movement? Of investment Increase in Gov't budget Deficit If the gov. runs a larger deficit, it affects…. (I-G) --> Saving decreases- -> S curve shifts -->Public Savings falls - Interest rates must rise to get bonds issued - It becomes more costly for a firm to get a loan, because it is more expensive If the gov. runs a larger deficit, it affects…. (I-G) --> Saving decreases- -> S curve shifts -->Public Savings falls - Interest rates must rise to get bonds issued - It becomes more costly for a firm to get a loan, because it is more expensive - Cost of acquiring capital on project becomes too high Longer term interest rate- good proxy for growth. Interest rates are determined in the long run by long term savers - Increases in investment spending, policies that affect. --> Investment tax credits (QLF: Quantity of loans funded Money Wednesday, September 21, 2016 2:59 PM High transaction cost with barter, so money was created. Initially, money was all commodity Commodity Money- Money that takes the format commodity with intrinsic value US was on the gold standard. We did not officially move off the gold standard until 1971. Cigarettes and Cognac were used in Germany as commodity Fiat money- money without intrinsic value that is "used by gov't decree" We have had little inflation since 1982 Value of the dollar in the US: Small transactions were problematic on the gold standard. Historically, fiat money doesn't have a great name. Contiential dollars were worthless by the end of "the" war. The winner of WWI made Germany and other axis powers pay reparations for the war. These reperations were so expensive, Germany had to deflate its currency to pay it all off. Therefore, these is a link between hyper inflation and socialism Money acts as a medium of exchange. It is a medium/ unit of account. We measure things in term of the dollar. It is what we use to buy goods and services. It is a measurement. It is out store of (liquid) value. its currency to pay it all off. Therefore, these is a link between hyper inflation and socialism Money acts as a medium of exchange. It is a medium/ unit of account. We measure things in term of the dollar. It is what we use to buy goods and services. It is a measurement. It is out store of (liquid) value. Inflation erodes the purchasing power of the dollar Money supply (Ms) = C (currency) + D (demand deposits) Demand deposits- deposits you can access on demand by writing a check (held in bank account) M1 = C + D + traveler's check ( + other checkable deposits) M1 = \$3.3 Trillion

×

×

### BOOM! Enjoy Your Free Notes!

×

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

## Why people love StudySoup

Bentley McCaw University of Florida

#### "I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"

Amaris Trozzo George Washington University

#### "I made \$350 in just two days after posting my first study guide."

Bentley McCaw University of Florida

Forbes

#### "Their 'Elite Notetakers' are making over \$1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!
×

### Refund Policy

#### STUDYSOUP CANCELLATION POLICY

All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email support@studysoup.com

#### STUDYSOUP REFUND POLICY

StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here: support@studysoup.com

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to support@studysoup.com