Fiscal Policy
What term describes when the government changes taxes or government spending to influence the economy?
Fiscal policy
What is it called when the government spends more money than it collects in revenue?
Budget deficit
What is the name of the central bank of the United States?
Federal Reserve System
When interest rates are high, what typically happens to borrowing?
Borrowing decreases
What is the name for a tax placed on imported goods?
Tariff
What type of policy would the government use to boost economic activity during a recession?
Expansionary fiscal policy
What is the term for when government revenue is greater than government spending?
Budget surplus
What group of seven appointed members supervises the Fed and helps set policy?
Board of Governors
When interest rates are low, how does that usually affect loan applications?
More people apply for loans
What trade restriction sets a limit on how many goods can be imported?
Quota
If the government raises taxes and cuts spending to slow inflation, what policy is it using?
Contractionary fiscal policy
What do we call the total accumulation of past government deficits?
The national debt
What type of monetary policy increases the money supply to stimulate the economy?
Expansionary monetary policy
If the central bank wants to encourage spending and investment, should interest rates generally go up or down?
Down
What is the common currency used by many European countries?
Euro
What two main tools does the government use when carrying out fiscal policy?
Taxes and government spending
When taxes are reduced for households, which part of GDP usually increases because people have more money to spend?
Consumer spending
What type of monetary policy is used to reduce inflation by decreasing the money supply?
Contractionary monetary policy
What might the Federal Reserve do if unemployment is very high?
Use expansionary monetary policy
What international organization manages cooperation between oil-producing countries to influence oil prices?
Organization of the Petroleum Exporting Countries (OPEC)
What economic concept describes how government spending can lead to additional economic activity beyond the original amount spent?
The multiplier effect
What is the current debt of the U.S.?
$39 Trillion
When the Fed buys government bonds from banks, what happens to the money supply?
It increases
What might the Fed do if inflation is rising too quickly?
Use contractionary monetary policy
What global organization acts as the “trade referee,” helping countries follow fair trade rules?
World Trade Organization