Category 1
The goal of keeping most people in a country employed.
What is full employment
The government’s plan for spending and taxes to help the economy.
What is fiscal policy
How the central bank controls money and interest rates.
What is monetary policy
When prices of goods and services go up over time.
What is inflation
The total value of everything a country produces in a year
What is GDP
A growing economy usually has an increase in this, which measures all goods and services produced.
What is GDP
When the government spends more money than it collects in taxes
What is a budget deficit
Lowering this encourages people and businesses to borrow and spend.
What is the interest rate
Inflation caused by too much demand for products.
What is demand-pull inflation
High inflation + high unemployment + slow growth.
What is stagflation
When a country sells more to other countries than it buys, it has this.
What is a trade surplus
A policy to slow down inflation by cutting spending or raising taxes
What is contractionary fiscal policy
When the central bank buys bonds to put more money into the economy.
What are open market operations
When prices keep falling over time.
What is deflation
A tax on imported goods to protect local businesses.
What is a tariff
A stable economy avoids big changes in jobs, prices, and production.
What is economic stability
A policy to boost the economy during a recession by spending more or cutting taxes.
What is expansionary fiscal policy
The rule that banks must keep some money in reserve.
What is the reserve requirement
Extremely fast and uncontrollable price increases
What is hyperinflation
The idea that governments should spend more during recessions.
What is Keynesian economics
Using resources wisely to make the most products possible.
What is productive efficiency
When government spending causes a bigger increase in the country’s total income.
What is the multiplier effect
The central bank’s two main goals: stable prices and low unemployment.
What is the dual mandate
The measure that tracks price changes for common goods
What is the Consumer Price Index
The interest rate banks charge each other for overnight loans
What is the federal funds rate