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DISCRETIONARY POLICY: Government policies that involve explicit actions designed to achieve specific goals. A common type of discretionary policy is that designed to stabilize business cycles, reduce unemployment, and lower inflation, through government spending and taxes (fiscal policy) or the money supply (monetary policy). Discretionary policies are also termed activist policies because they involve active decisions by government. A contrast to discretionary policy is automatic stabilizers that help stabilize business cycles without explicit government actions.
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Lesson 18: Banking | Unit 5: The Economy
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Page: 24 of 24
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- Some of the main benefits provided by banks as:
- Financial intermediaries: banks match savers and borrowers.
- Depository institutions: banks oversee a share of the nation's M1 money supply.
- That when a bank fails to maintain adequate reserves, it runs the risk of starting a chain reaction that could cause economy-wide financial instability.
- That banking regulations have lessened but not eliminated banking instability problems.
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DEMAND ELASTICITY AND TOTAL EXPENDITURE The notion that price-induced changes in total expenditure (price times quantity) depend on the relative price elasticity of demand. If demand is relatively elastic, then changes in price cause total expenditure to change in the opposite direction. If demand is relatively inelastic, then changes in price cause total expenditure to change in the same direction. If demand is unit elastic, then changes in price do not cause any change in total expenditure.
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One of the largest markets for gold in the United States is the manufacturing of class rings.
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"Be kind and merciful. Let no one ever come to you without coming away better and happier." -- Mother Teresa of Calcutta, humanitarian
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IBRD
International Bank for Reconstruction and Development
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