Page 7 - E-NOTE 2-converted

EFFECTS

INFLATION

• DISTRIBUTION OF INCOME
• SAVINGS
• PRODUCTION
• BALANCE OF PAYMENT

UNEMPLOYMENT

• LOSS OF INCOME AND SELF RESPECT
• LOSS OF JOB SKILLS
• SOCIAL AND POLITICAL PROBLEMS
• HIGH UNEMPLOYMENT RATE

MEASURES TO CONTROL (MONETARY POLICY)

INFLATION (CONTRACTIONARY)

• OPEN MARKET OPERATIONS
• RAISING THE RESERVE REQUIREMENT
• RISING THE BANK RATE
• RAISING THE INTEREST RATE

UNEMPLOYMENT (EXPANSIONARY)

• OPEN MARKET OPERATIONS-PURCHASE SECURITIES
• LOWERING THE RESERVE REQUIREMENT
• LOWERING THE BANK RATE
• LOWERING THE INTEREST RATE

MEASURES TO CONTROL (FISCAL POLICY)

INFLATION (CONTRACTIONARY)

• INCREASES IN TAXES
• DECREASE IN GOVERNMENT SPENDING

UNEMPLOYMENT (EXPANSIONARY)

• DECREASES IN TAXES
• INCREASES IN GOVERNMENT SPENDING