Government's Bag of Tools
use of government spending and tax policies to influence economic conditions
Fiscal Policy
who makes Fiscal Policy?
Congress & US President
A national system of banks that influence and control the economy and the money supply is known as?
The "Fed"
Federal Reserve
a legally enforceable agreement between two or more parties.
A tax on people's earnings
Income tax
nation’s central bank has available to promote sustainable economic growth by controlling the overall supply of money that is available
Monetary Policy
The two things that the Government can do under Expansionary Policy?
1. Decrease Taxes
2. Increase Spending
When the Fed increases the money supply?
Easy-money policy
Patents?
exclusive right for an invention
Consumer tax on a specific kind of merchandise,
Excise tax
Real GDP?
Gross Domestic Product of a nation after the distortions caused by price (inflation etc.) have been removed.
The two things that the Government can do with Contraction Policy
1. Increase taxes
2. Decrease spending
When the Fed decreases the money supply
Tight-money policy
rights that creators have over their literary or artistic works.
Copyright
tax graduated so that people with higher incomes pay larger fraction
Progressive tax
The Federal Budget is?
the amount of money the government expects to receive for a certain year and authorizes the amount of money the government can spend that year.
Automatic Stabilizers are?
features of fiscal policy that work automatically to steady the economy.
EX: transfer payments, income taxes, unemployment and welfare
Three tools of the Fed?
Open Market Operations
Discount Rate
Reserve Requirement
brand that has exclusive legal protection for both its brand name and its design
Trademark
Three Levels of Government that can tax
Federal, State. Local
provides all Americans with bank insurance of up to $250K per deposit account.
Federal Deposit Insurance Corporation (FDIC)
Discretionary Fiscal Policy?
refers to actions selected by the government to stabilize the economy.
Ex: increases in spending on roads, bridges, stadiums, and other public works.
Explain the three tools below?
Open Market Operations:
Discount Rate:
Reserve Requirement:
Open Market Operations: Fed buys or sells bonds
Discount rate: Where the Fed can lower or raise the interests rate effects loans
Reserve Requirement: percentage/amount of all deposits that a bank must keep in their vaults.
Eminent Domain
Where the Government can take your property, but have to give you compensation.
government intervention to alter market structure or prevent abuse of market power
Sherman Antitrust Act