Economics Lesson 13

 

The Federal Reserve System ( The FED)

GOALS- to encourage economic growth by controlling inflation and unemployment.

Its part of the government

-         the members are appointed by the President and approved by congress

* We want our economy to grow

-We have to have more jobs because there are more people

 

We Need

Inflation at about 3%

Unemployment at about 5%

-Our economy is growing at 3% and unemployment at about 5% which means we have full employment

 

professionals will move jobs often it’s the reason for 5%

durning that time they’re unemployed

-We want unemployment so we can create more jobs

 

Unemployment  rate now is about 5%

Rate of Growth Chart- steady growth rate the lines are fairly smooth except in 43

 

                  Money in the Market

 

OUT

-If we take money out of the system prices go down and unemployment goes up if you want to slow down the the economy take money out.

Try to balance things out

 

 

IN

-If you put money in prices go up and unemployment goes down

 

Take money out by selling treasury bills they raise interest rates and it becomes more expensive to borrow money. If you put money in the bank it will be worth more.You don’t give out loans to take money out of the market.

 

Put money in by buying treasury bills or lower intrest rates money is cheaper don’t leave it in the bank. Give out loans to get money in the market.

 

   Congress

IN

Increase spending  or lowering taxes

 

OUT

Decrease spending or raising taxes

 

-Spend money to put it  in the market not take it out

Sometimes the FED and Congress work against eachother

Congress tends to be wrong while the FED tends to be right