General
True or False: Central banks conduct monetary policy to speed up or slow down the overall economy
True or False: Contractionary fiscal policy involves increasing government spending or decreasing taxes
False
What is the cost of borrowing money known as?
Interest
What are slices of ownership in a company called?
Stocks
What is the central bank of the United States called?
The Federal Reserve (Fed)
______ economic theories assume that the economy will fix itself in the long run
Classical
Name one of the two tools used in fiscal policy
Government spending / Taxation
What is the government institution that controls a country's money supply, manages interest rates, and helps keep the banking system stable?
Central Bank
What is one of the three purposes of money according to economists?
Acts as a medium of exchange / Store of value / Unit of account
The ____ effect explains how an initial change in government spending leads to a larger overall impact on the economy
What is known as the use of government spending and taxation to influence the economy?
Fiscal policy
What is it called when the real GDP is lower than the potential GDP at full employment level?
Recessionary Gap
Name one of the three tools used in monetary policy
Interest rate changes / Open market operations / Reserve requirements
What is the system called when goods and services of equal value are exchanged between without using any form of monetary exchange?
Barter System
In the past, each dollar issued by the U.S. government was redeemable for a specific amount of gold. What was this known as?
What is the situation called when the real GDP is higher than the potential GDP at full employment level
Inflationary Gap
What is it called when increased government spending leads to reduced private sector investment?
Crowding out
What is it called when the central bank buys or sells short term government bonds to influence money supply?
Open Market Operations (OMO)
______ have a fixed maturity date, at which point the principal is repaid
In a _______, a lender deposits money which is then loaned to a household or business
Bonds / Bank
Who said this: "The pieces of green paper have value because everyone thinks they have value"
Milton Friedman
What is the policy that involves raising taxes and cutting government spending to reduce debt?
Austerity
Which economic theory advocates for government intervention to prevent recessions and boost employment?
Keynesian economics
What is a monetary policy tool used by central banks to stimulate the economy by purchasing long-term securities?
Quantitative Easing (QE)
Name the three main places where trading happens in the financial system?
Banks, bond market, and stock market
What is it called when the government spends more money than it collects in tax revenue?
Deficit spending