Money
What type of money do we use in the United States?
Fiat
What is a barter system?
Trade things for other things
Who is responsible for Monetary Policy?
The Fed
Who is responsible for Fiscal Policy?
Federal Government
What is the purpose of taxes?
Government uses tax dollars to pay for services that it wouldn't be able to pay for
What type of money can be exchanged for a specific commodity, which is listed on the front and back of the note(bill)?
Representative Money
Provide a good example of a barter transaction
What is Monetary Policy?
The Fed managing the money supply.
What is Fiscal Policy?
Gov plan for Taxing and Spending
Income Tax
Property Tax
Sales Tax
Tariff
What is a good example of Commodity Money?
Silver Dollar
Gold Bar
What is the primary advantage of a barter system?
Individuals can acquire goods and services without money.
*Perfect for simple or less developed economies
What are 3 tools of Monetary Policy?
Interest Rates
OMO
Reserve Requirement
What Fiscal Policy changes will be made by the incoming Presidential administration?
Cut Gov spending
What is a tariff and what are the pros and cons of them?
A tariff is a tax on imports.
Pro: Protects domestic companies and jobs
Cons: Limits free trade, increases prices on certain goods
What are the pros and cons of a Fiat Money standard?
Con: Inflation
What is the primary negative of a barter system?
Limited by availability of resources
What specific Monetary Policy action should The Fed take if Inflation is too high?
Contractionary Monetary Policy
Raise Int Rates
Sell Bonds
What should the Gov do if the economy is in a recession?
Increase gov spending and/or cut taxes
What are the pros and cons of cryptocurrency?
Pro: Decentralized and independent of policy
Con: Unstable value, not endorsed by established authority
What are the pros and cons of a Representative Money Standard?
Pro: Stable Money Supply and prices
Con: Government can't access cash during financial crisis
What is the primary difference between a money system and barter system?
Money systems use money as the medium of exchange
Barter system involves trading things for other things
Expansionary = More spending, growth
Contractionary= Less spending, slow down
What do Fiscal and Monetary Policy have in common?
Why was cryptocurrency created?
Designed to be a currency that is independent of Government oversight.