ECON 2030 Lecture Notes - Aggregate Demand, Monetary Base, Money Supply
Document Summary
Today"s menu: wednesday 09 july 2014: business, practice problems, chapter 26: 1- 5, 9-13, 15-18, 20, chapter 32: 3-5, 12-15, 18, final exam: this saturday (7:30-9:30 am) Substance: aggregate demand : dability and willingness to purchase everything. The supply side in the short run will be exactly the same as a micro market. 2 factors: (see below) policy change & everything else: determinants of aggregate demand, monetary policy involves changes in interest rates, monetary base and money supply. In the us it is controlled by the central bank as is the case in most countries. expansionary (+) expanding monetary base, decreasing interest rates, open market purchase of bonds. Contractionary (-) reducing the base of money supply, increasing interest rates, open market sale of bonds: fiscal policy are decisions about changes in government spending, taxes, transfer payments. In the us it is controlled by congress and the president.