Effects of Real Estate Industry of U.S. Fiscal Policy

MONETARY POLICY AFFECTING REAL ESTATE

Keynes held that the rate of interest is determined by the interesection of the supply schedule of money and the demand schedule for money.1 Keynesian economic theory, with respect to interest, thus, is, essentially, a monetary theory.2 The Keynesian liquidity preference schedule includes both the transactions demand and the assets demand for money.3

The loanable funds theory provides a set of savings schedules which are related to a variety of income levels.

1R. A. Mundell, Monetary Theory (Santa Monica, Califor nia: Goodyear Publishing Company, Inc., 1971), 2326.

2M. Kalecki, The Economic Dynamic (London: Allen & Unwin Publishers, 1954), 140

2J. J. Klein, Economic Theory of Interest (New York: McGrawHill Book Company, 1982), 44.

Keynesian theory provides a family of investmentdemand schedules which are also related to a variety of income levels. Taken together, these two sets of schedules may be used to derive the investmentsavings (IS) curve, which, in turn, describes the functio

. . .
ggregate equilibrium point to a level higher than __________ 5H. Lever, "The Dollar and the World Economy," Lloyds Bank Review, July/August 1985, 7781. 6 that which would normally be anticipated in the interrelationship of the IS Curve and the LM Curve. In effect, it may be said that foreign money attracted to the US was self perputating the high real interest rates to which it was attracted. The foreign money, by increasing the money supply, contributed to the effort to keep the inflation rate low, while keeping real interest rates high. The foreign money has permitted the US to enjoy an economic recovery, but it has also made the country's economy highly dependent on a continuation of foreign investment capital importation. FISCAL POLICY AFFECTING REAL ESTATE When Ronald Reagan campaigned for the presidency in 1980, one of his most consistent themes concerned the federal government's budget deficit. He continually preached of the economic evils of what he described as the irresponsibly high federal budget deficits, which he attributed wholly to the Carter Administration fiscal policy. Candidate Reagan pledged to restore economic sanity in the US by, among other things, eliminating federal budget defi
. . .

Some common words found in the essay are:
Speeches Day, Atlanta August, Book Company, LM Curve, Federal Reserve, Reserve Treasury, Times Section, Bank Atlanta, Reserve Board, Model Curve, real estate, real rates, economic advisers, budget deficits, advisers economic indicators, economic indicators, advisers economic, lm curve, currency exchange, federal budget, real estate industry, economic advisers economic, council economic advisers, council economic, economic indicators washington,
Approximate Word count = 2948
Approximate Pages = 12 (250 words per page)