Chapter 5 - Policy makers and the money supply. This chapter includes contents: Discuss the objectives of national economic policy and the conflicting nature of these objectives, identify the major policy makers and briefly describe their primary responsibilities, identify the policy instruments of the . treasury and briefly explain how the treasury manages its activities, | Chapter 5 Policy Makers and the Money Supply © 2011 John Wiley and Sons Chapter Outcomes Discuss the objectives of national economic policy and the conflicting nature of these objectives Identify the major policy makers and briefly describe their primary responsibilities Identify the policy instruments of the . Treasury and briefly explain how the Treasury manages its activities Chapter Outcomes (Continued) Describe . Treasury tax policy & debt management responsibilities Discuss how the expansion of the money supply takes place in the . banking system Briefly summarize the factors that affect bank reserves Chapter Outcomes (Concluded) Explain the meaning of the monetary base and money multiplier Explain what is meant by the velocity of money and give reasons why it is important to control the money supply National Economic Policy Objectives Economic Growth High Employment Price Stability Balance in International Transactions National Economic Policy: Important Terms GROSS DOMESTIC PRODUCT: GDP is the output of goods and services in an economy INFLATION: Increase in price of goods/services not offset by increase in quality REAL GDP: When GDP exceeds rate of inflation, the result is higher living standards Four Policy Maker Groups FEDERAL RESERVE SYSTEM Sets Monetary Policy THE PRESIDENT Helps set Fiscal Policy CONGRESS Helps set Fiscal Policy . TREASURY Conducts Debt Management Policy Policy Makers & Economic Objectives Figure in text depicts the: four policy maker groups (Federal Reserve System, the President, Congress, and . Treasury), three types of policies or decisions (monetary policy, fiscal policy, and debt management) they make, and four economic objectives (economic growth, high employment, price stability, and balance in international transactions) they are trying to achieve Policy Makers in the European Economic Union Members of the European Union (EU): signed the Maastricht Treaty in 1991 with the . | Chapter 5 Policy Makers and the Money Supply © 2011 John Wiley and Sons Chapter Outcomes Discuss the objectives of national economic policy and the conflicting nature of these objectives Identify the major policy makers and briefly describe their primary responsibilities Identify the policy instruments of the . Treasury and briefly explain how the Treasury manages its activities Chapter Outcomes (Continued) Describe . Treasury tax policy & debt management responsibilities Discuss how the expansion of the money supply takes place in the . banking system Briefly summarize the factors that affect bank reserves Chapter Outcomes (Concluded) Explain the meaning of the monetary base and money multiplier Explain what is meant by the velocity of money and give reasons why it is important to control the money supply National Economic Policy Objectives Economic Growth High Employment Price Stability Balance in International Transactions National Economic Policy: .
