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15 Cards in this Set

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Fiscal policy

how the govt decides to collect and spend tax dollars

there are 2 parts to fiscal policy: spending + taxes

aim of fiscal policy

to ensure economic growth, full employment, price stability, and to provide services (i.e: defense, roads, schools, etc

What does the national govt spend $$ on?

Taxes are spent on: national debt, national defense, direct payment to individuals (i.e: social security),and discretionary spending (i.e: trandportation, criminal justice, environment)

Who approves fiscal policies?

ALL Legislators

Fiscal policy can help the economy ____ or _____

Fiscal policy can help the economy grow or slow down

how can Fiscal Policy help the economy grow?

it can increase govt spending and reduce/cut taxes (which encourages people to spend MORE)

How can fiscal policy help the economy slow down?

it can raise/increase taxes (which makes consumers spend less) and cut public spending

Monetary policy

controls the growth rate of the money supply/regulation of money supply by Feds

Interest rate

the percentage added to your payment each time

Federal Reserve Bank

the bank's bank

Feds

reserve requirement

amount of money a bank must have (in case of an emergency)

emergency money

Discount rate

the rate that the Feds charge other banks

How can monetary policy help the economy grow?

it can lower reserve requirements, lower the discount rate, and buy securities/bonds

How can monetary policy help the economy slow?

it can help the economy slow by increasing the reserve requirements, increase the discount rate, sell bonds/securities

Taxes

income the govt recieves from people and businesses. govr can increase/decreade taxes.