STUDY ECONOMIC FACTORS IF YOU PLAN TO SIT FOR THE SECURITIES INDUSTRY ESSENTIALS EXAM (SIE)

 Planning to take the SIE Exam shortly? Don't neglect Economic Factors, such as Monetary and Fiscal Policy. You need to be able to define these, and have knowledge about how they differ. How do I know this? FINRA publishes a Content Outline for the Securities Industry Essentials Exam, and Section 1.3.1 of the Content Outline specifically mentions Monetary and Fiscal Policy.

Bob Eder in his Study for the Securities Industry Essentials (SIE) Exam discusses the differences between Fiscal and Monetary Policy. Here is a sample of Bob Eder's discussion:

Fiscal Policy                                                                (1.3.1)

The budget for the United States is set by Congress. Congress decides how much to spend on defense, education, and other workings of the federal government. This is fiscal policy, as opposed to monetary policy. Monetary policy is set by the Fed. Fiscal policy is set by Congress.

Monetary Policy                                                         (1.3.1)

As opposed to fiscal policy, dealing with the budget for the various departments of the federal government, monetary policy deals with the amount of money that should be in the U.S. economy. The Fed sets monetary policy. It includes setting interest rates (i.e., the cost of borrowing money) and attempting to establish full employment in the workforce. The more money in circulation, the easier that businesses can borrow monies to expand. Too much money available can lead to periods of inflation.

PRACTICE QUESTION

Some students confuse fiscal policy with monetary policy. The economics professor, Mr. Bacule, explains that fiscal policy is not the same as monetary policy. You are a student in this class. Which of the following controls fiscal policy?

a.                  U.S. Congress

b.                  Federal Reserve

c.                   SEC

d.                  NYSE

The answer is (a). Mr. Bacule asks who controls fiscal policy. Congress sets fiscal policy, meaning it decides how much to spend on each department of the government. Fiscal policy pertains to the budget of the federal government.

Here is the link to FINRA's Content Outline for the SIE Exam. See the references to Monetary and Fiscal Policy in Section 1.3.1. 

Study for the Securities Industry Essentials (SIE) Exam is available from Amazon in both paperback and Kindle e-book versions. Here is the link to Bob Eder's book on Amazon.

For questions about Bob Eder's Study for the Securities Industry Essentials (SIE) Exam, or questions in general about the SIE Exam, or about Monetary and Fiscal Policy, feel free to email Bob Eder at bobeder@bobeder.net.

Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law, in 2001. See Bob Eder's Author Page on Amazon.com.