Monetary & Fiscal Policy - Assignment Essays

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Banks

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private firms that accept deposits and extend loans

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Money Supply

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the quantity of money available in the economy

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Interest Rate

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Percentage of amount borrowed to be added to the amount loaned and paid back

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The Federal Reserve

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the central bank of the United States - controls Monetary Policy

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Monetary Policy

answer

Government policy that attempts to manage the economy by controlling the money supply and thus interest rates.

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Expansionary Monetary Policy

answer

Federal Reserve system actions to increase the money supply, lower interest rates, and expand real GDP

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Contractionary Monetary Policy

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the Federal Reserve's policy of increasing interest rates to reduce inflation

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Supply Shock

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An unexpected event that causes the short-run aggregate supply curve to shift

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Aggregate Demand

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the total demand for final goods and services in an economy at a given time

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Aggregate Supply

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the sum of all the supply in the economy

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Government Spending

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spending by all levels of government on final goods and services

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Taxes

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Fees for the support of government required to be paid by people and businesses.

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Fiscal Policy

answer

Government policy that attempts to manage the economy by controlling taxing and spending.

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Business Cycle

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Alternating periods of economic expansion and economic recession

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Recession

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A slowdown in a nation's economy, which often causes high unemployment

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Economic Depression

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Really, really bad recession

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Automatic Stabilizers

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changes in fiscal policy that stimulate aggregate demand when the economy goes into a recession without policymakers having to take any deliberate action (e.g. Spending goes up through unemployment insurance, taxes go down as income drops)

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Fiscal Policy Lags

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is the time between the beginning of recession or inflation and the certain awareness that is actually happening.

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Crowding Out

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a decline in private expenditures as a result of an increase in government purchases

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Deficit

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An excess of federal expenditures over federal revenues.

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National Debt

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The sum of government deficits over time.

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Expansionary Fiscal Policy

answer

An increase in government purchases of goods and services, a decrease in net taxes, or some combination of the two for the purpose of increasing aggregate demand and expanding real output

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Contractionary Fiscal Policy

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Fiscal policy used to decrease aggregate demand or supply. Deliberate measures to decrease government expenditures, increase taxes, or both. Appropriate during periods of inflation.

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Congress

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Conducts Fiscal Policy in the U.S.

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multiplier effect

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An effect in economics in which an increase in spending produces an increase in national income and consumption greater than the initial amount spent.

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question

Banks

answer

private firms that accept deposits and extend loans

question

Money Supply

answer

the quantity of money available in the economy

question

Interest Rate

answer

Percentage of amount borrowed to be added to the amount loaned and paid back

question

The Federal Reserve

answer

the central bank of the United States - controls Monetary Policy

question

Monetary Policy

answer

Government policy that attempts to manage the economy by controlling the money supply and thus interest rates.

question

Expansionary Monetary Policy

answer

Federal Reserve system actions to increase the money supply, lower interest rates, and expand real GDP

question

Contractionary Monetary Policy

answer

the Federal Reserve's policy of increasing interest rates to reduce inflation

question

Supply Shock

answer

An unexpected event that causes the short-run aggregate supply curve to shift

question

Aggregate Demand

answer

the total demand for final goods and services in an economy at a given time

question

Aggregate Supply

answer

the sum of all the supply in the economy

question

Government Spending

answer

spending by all levels of government on final goods and services

question

Taxes

answer

Fees for the support of government required to be paid by people and businesses.

question

Fiscal Policy

answer

Government policy that attempts to manage the economy by controlling taxing and spending.

question

Business Cycle

answer

Alternating periods of economic expansion and economic recession

question

Recession

answer

A slowdown in a nation's economy, which often causes high unemployment

question

Economic Depression

answer

Really, really bad recession

question

Automatic Stabilizers

answer

question

Fiscal Policy Lags

answer

is the time between the beginning of recession or inflation and the certain awareness that is actually happening.

question

Crowding Out

answer

a decline in private expenditures as a result of an increase in government purchases

question

Deficit

answer

An excess of federal expenditures over federal revenues.

question

National Debt

answer

The sum of government deficits over time.

question

Expansionary Fiscal Policy

answer

An increase in government purchases of goods and services, a decrease in net taxes, or some combination of the two for the purpose of increasing aggregate demand and expanding real output

question

Contractionary Fiscal Policy

answer

Fiscal policy used to decrease aggregate demand or supply. Deliberate measures to decrease government expenditures, increase taxes, or both. Appropriate during periods of inflation.

question

Congress

answer

Conducts Fiscal Policy in the U.S.

question

multiplier effect

answer

An effect in economics in which an increase in spending produces an increase in national income and consumption greater than the initial amount spent.

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