Economic Policy and The Federal Reserve

These flashcards cover key vocabulary related to economic policy and the role of the Federal Reserve.

Fiscal policy

Taxing and spending decisions determined by legislative and executive branches.

Monetary policy

Policies involving the supply of money, including control of and changes in money supply.

Interest rate

The amount lenders charge borrowers.

Inflation

An economic condition when price increases are linked to a decrease in the value of currency.

Stagflation

The joint occurrence of slow growth, unemployment, and inflation.

Market Economy

An economic system where prices of goods and services are determined through the interaction of buyers and sellers based on supply and demand.

Keynesian Economics

The theory that government should spend money according to economic needs to stimulate the economy during a recession.

Laissez-Faire economics

An economic philosophy advocating minimal government intervention in the economy; free market principles.

Supply-Side Economics

An economic theory suggesting that tax cuts and deregulation enhance economic growth.

Federal Reserve

The central bank of the U.S. that controls major monetary policies and the money supply.

Independent agency

A government entity that operates separately from the executive branch.

Board of governors

The governing body of the Federal Reserve System, appointed by the President and overseen by Congress.

Controlling inflation

One of the primary goals of the Federal Reserve to stabilize the economy.

Interest rate changes impact on economy

Changing interest rates can stabilize the economy.