Studied by 0 people
Economic growth
Refers to an increase in the overall production of goods and services in an economy over time, measured by changes in the gross domestic product (GDP).
Full employment
Aims to achieve a low level of unemployment where most individuals who are willing and able to work can find employment.
Price stability
Seeks to maintain a stable and predictable rate of inflation, keeping the general level of prices relatively constant over time.
Fiscal policy
Government's use of government spending and taxation to influence the economy.
Monetary policy
Involves the central bank's management of money supply and interest rates to achieve economic goals.
Progressive Tax
Tax rate increases as taxable income or wealth increases, based on the ability to pay principle.
Regressive Tax
Tax rate decreases as taxable income or wealth increases, disproportionately affecting lower-income individuals.
Inflation
Sustained increase in the general price level of goods and services over time, eroding purchasing power.
Expansionary Fiscal Policy
Increases government spending and/or decreases taxes to stimulate economic growth and demand.
Contractionary Fiscal Policy
Decreases government spending and/or increases taxes to control inflation or reduce deficits.
Policy Lags
Recognition, decision, implementation, and effectiveness lags in the formulation and impact of economic policies.
Expansionary Monetary Policy
Increases money supply and lowers interest rates to boost economic activity and employment.
Contractionary Monetary Policy
Reduces money supply and raises interest rates to control inflation and economic overheating.
Republican administrations' preferences
Favor lower taxes, reduced government spending, and limited government intervention.
Democratic administrations' preferences
Prioritize social welfare programs, progressive taxation, and increased government spending.
Federal Reserve System
Central banking system responsible for monetary policy, bank supervision, and financial system stability.
Fed Funds Rate
Interest rate at which banks lend reserves to each other overnight, influencing short-term rates.
Reserve Rate
Percentage of deposits banks must hold as reserves, regulated by the Federal Reserve to impact money supply.
Value of the Dollar
Affects trade, inflation, and capital flows, influenced by various economic factors.
Exchange Rate
Rate at which one currency can be exchanged for another, impacting international trade and investment flows.
GDP Components in the United States:
undefined
Total spending by individuals and households on goods and services.
Methods to Calculate GDP:
undefined
Total spending on final goods and services (C + I + G + (X - M)).
Types of Goods:
undefined
Short-lived goods like food and clothing.
GDP per capita:
undefined
Difference between Real GDP and Nominal GDP:
undefined
Not adjusted for inflation.
Business Cycle Phases:
undefined
Increasing economic activity with rising GDP and employment.
Unemployment Types:
undefined
Temporary job transitions.
Unemployment Types Continued:
undefined
Arises from economic shifts.
Unemployment Types Continued:
undefined
Associated with economic downturns.
