Economic Policies and the Business Cycle

These flashcards cover key economic concepts related to the business cycle, the Federal Reserve, and fiscal and monetary policies.

Structural Unemployment

Occurs when human capital does not match the needs of the labor market.

Seasonal Unemployment

A type of structural unemployment where human capital is only needed at specific times of the year.

Full Employment

Economic condition where unemployment is between 4-6%, not a 0% unemployment rate.

Business Cycle

The fluctuation of economic activity over time, consisting of expansion, peak, recession, and trough.

Real GDP

Gross Domestic Product adjusted for inflation, reflecting actual economic activity.

Federal Reserve

The central bank of the United States established in 1913 to create a more stable monetary system.

Federal Open Market Committee (FOMC)

The committee responsible for overseeing open market operations and setting monetary policy.

Board of Governors

An independent agency of the federal government that supervises the Federal Reserve System.

Monetary Policy

Actions by the Federal Reserve to influence the money supply and interest rates in the economy.

Expansionary Monetary Policy

A policy that decreases reserve requirements and interest rates to increase money supply and stimulate the economy.

Contractionary Monetary Policy

A policy that increases reserve requirements and interest rates to decrease money supply and control inflation.

Fiscal Policy

Government adjustments to spending and taxes to influence the economy.

National Debt

The total amount of money that a country's government has borrowed.

Surplus

When the government spends less than it collects in revenue.

Deficit

When the government spends more than it collects in revenue.