FM 116 Lecture Notes - Lecture 2: Natural Monopoly, Gross Domestic Product, Planned Economy

• School: FIT
• Department: Fashion Business Management
• Course: FM 116
• Professor: George Sanchez

Document Summary

Study of how wealth is created and distributed: guide decision-making, help understand broad forces that affect business and personal life. Economy: financial and social system of how resources flow through society. Help achieve the goal of controlled, sustained economic growth. Fiscal policy: government efforts to influence the economy through taxation and spending (us congress) Monetary policy: federal reserve decisions that shape the economy by influencing interest rates and the supply of money. Debt ceiling: maximum amount congress lets the government borrow. National debt/ federal debt: sum of the total amount of money the government has borrowed and not yet repaid. How much has to be paid back is also contingent on the prevailing interest rates at the time the money was borrowed. Core purpose: to regulate (speeds up or slows down) the us economy to maintain a healthy balance. When economy contracts (slow down), fed increases the money supply. When prices rise, fed reduces the money supply.