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25 Cards in this Set

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Contractionary Policy

A type of policy that is used as a macroeconomic tool by the country's central bank or finance ministry to slow down an economy. Contractionary policies are enacted by a government to reduce the money supply and ultimately the spending in a country.

Keynesian Economics


Keynesian economics is an economic theory named after John Maynard Keynes, a British economist who lived from 1883 to 1946. He is most well-known for his simple explanation for the cause of the Great Depression. His economic theory was based on a circular flow of money, which refers to the idea that when spending increases in an economy, earnings also increase, which can lead to even more spending and earnings. Keynes' ideas spawned numerous interventionist economic policies during the Great Depression.

Budget Deficit


most commonly used to refer to government spending rather than business or individual spending. When referring to accrued federal government deficits, the term "national debt” is used.

Budget Surplus

The term "budget surplus" is most commonly used to refer to the financial situations of governments; individuals speak of "savings" rather than a "budget surplus "

Federal Reserve

The Federal Reserve is the central bank of the United States.

Check Clearing

The movement of a check from the depository institution at which it was deposited back to the institution on which it was written; the movement of funds in the opposite direction and the corresponding credit and debit to the involved accounts.

Board of Governors

a several-member group that oversees or manages the running of an institution. The U.S. Postal Service, the BBC, the World Bank, and numerous colleges and universities all have boards of governors. In the financial world, the best known board of governors is that of the Federal Reserve.

Monetary Policy

Monetary policy is one of the ways that the U.S. government attempts to control the economy. If the money supply grows too fast, the rate of inflation will increase; if the growth of the money supply is slowed too much, then economic growth may also slow.

Discount Rate

The discount rate also refers to the interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.

Required Reserve Ratio

the percentage of deposits that the Federal Reserve requires a bank to keep on hand at a Federal Reserve bank.

Open Market Operation

an activity by a central bank to buy or sell government bonds on the open market. A central bank uses them as the primary means of implementing monetary policy.

Tariff

a tax or duty to be paid on a particular class of imports or exports.

Imports

bring (goods or services) into a country from abroad for sale.

Trade Barriers

are measures that governments or public authorities introduce to make imported goods or services less competitive than locally produced goods and services. Not everything that prevents or restricts trade can be characterised as a trade barrier.

Absolute Advantage

The ability of an individual or group to carry out a particular economic activity more efficiently than another individual or group.

Comparative Advantage

the ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity.

Exchange Rates


the value of one currency for the purpose of conversion to another.

Exports

send (goods or services) to another country for sale.

NAFTA

the most comprehensive regional trade agreement ever negotiated by the United States and is scheduled to be fully implemented by the year 2008. In 1996, U.S. two-way trade in goods under the NAFTA with Canada and Mexico stood at $420 billion--a 44 % increase since the NAFTA was signed

European Union

economic and political union established in 1993 after the ratification of the Maastricht Treaty by members of the European Community and since expanded to include numerous Central and Eastern European nations.

World Trade Organization


international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably, and freely as possible.


Depreciation

a reduction in the value of an asset with the passage of time, due in particular to wear and tear.

Import Quota

An import quota is a limit on the quantity of a good that can be produced abroad and sold domestically. It is a type of protectionist trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in a given period of time.

GDP Per Capita

GDP per capita is gross domestic product divided by midyear population. GDP is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. Data are in current U.S. dollars.


Adam Smith

Adam Smith was an economist and philosopher who wrote what is considered the "bible of capitalism," The Wealth of Nations, in which he details the first system of political economy.