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16 Cards in this Set
- Front
- Back
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Describes both monetary and fiscal policy, the goals of which are to smooth out fluctuations in output and employment and to keep prices as stable as possible.
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Stabilization Policy
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Delays in the economy's response to stabilization policies.
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Time Lags
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The time it takes for policy makers to recognize the existence of a boom or a slump.
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Recognition Lags
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The time it takes to put the desired policy into effect once the economists and policy makers recognize that the economy is in a boom or a slump.
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Implementation Lags
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The time it takes for the economy to adjust to the new conditions after a new policy is implemented; the lag that occurs because of the operation of the economy itself.
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Response Lag
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Passed by the U.S. Congress and signed by President Reagan in 1986, this law set out to reduce the federal deficit by $36 billion per year with a deficit of zero slated for 1991.
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Gramm-Rudman-Hollings Act
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The amount by which the deficit changes with a $1 change in GDP.
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Deficit Response Index (DRI)
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Something that causes a negative shift in consumption or investment schedules or that leads to a decrease in U.S. exports.
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Negative Demand Shock
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Revenue and expenditure items in the federal budget that automatically change with the economy in such a way as to stabilize GDP.
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Automatic Stabilizers
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Revenue and expenditure items in the federal budget that automatically change with the economy in such a way as to destabilize GDP.
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Automatic Destabilizers
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A certificate that certifies ownership of a certain portion of a firm.
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Stock
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An increase in the value of an asset.
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Capital Gain
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The gain that occurs when the owner of an asset sells it for more than he or she paid for it.
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Realized Capital Gain
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An index based on the stock prices of 30 actively traded large companies. The oldest and most widely followed index of stock market performance.
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DOW Jones Industrial Average
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An index based on the stock prices of over 5,000 companies traded on the NASDAQ stock market. The NASDAQ market takes its name from the National Association of Securities Dealers Automated Quotation System.
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NASDAQ Composite
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An index based on the stock prices of 500 of the largest firms by market value.
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Standard and Poor's 500 (S&P 500)
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