Monetary and fiscal policy

Federal reserve system

attempt to regulate the nation’s economy

Promote stability

Full employment

Economic growth

raise interest rate

make more money more expensive to borrow

lower interest rates

money less expensive to borrow

SEC

federal regulating agency in the executive branch

Fiscal policy

various means the government uses to raise and spend money

Power to tax

Spend to influence economy

Tax cuts can be hard, people prefer nations economy to fix itself rather than gov involvement

Monetary policy

-federal reserve board manages the money to alter the value of the money

-process through which the govt can influence the nations economy through changes in the money supply and the availability of credit

Fed manipulate interest rates

Federal reserve board

responsible for regulation of govt monetary policy

Direct work of federal reserve system

Nations central bank

Reserve requirement

amount of money the federal reserve determines banks must keep in reserve with one of the federal reserve banks

Discount rate

rate of interest a bank must pay when it borrows money from a federal reserve bank

Interest

Charge for borrowed money

Generally a percentage of amount borrowed

Fiscal policy of state levels

helps citizens struggling, pump money into economies

Pay off governments debt

Slightest change in interest rate=

huge economic impact on well-being of govt and citizens

The fed is

Federal reserve system

the fed establishes

monetary policy by: raising or lowering the discount rate

Lowering discount rate

encourages commercial banks to lower their interest rate soon, loans thanks put more money in circulation, creates jobs

Raising discount rates

commercial banks increase their loan rates and less money goes into circulation

Income tax

individual or business it is a direct tax but may be laid without regard to population

Progressive tax

type of tax that higher percentage from high-income groups than from low-income groups

Corporate tax

most complicated of all federal taxes because many deductions allowed

Payroll taxes

tax imposed on nearly all employers and their employees

Self employed persons employees withheld from their paychecks

Regressive taxes

tax levied at a flare rate without regard to the level of a tax payers income or ability to pay

Excise tax

Tax laid on the manufacture, sale, consumption of goods and the performance of services (gas, oil, tires, etc)

Estate tax

levy imposes on the assets of one who dies

Inheritance tax

tax Levied on the beneficiary’s hare of an estate

Gift tax

tax on a gift by a living person

Custom duties

tax laid on good brought into the US from abroad, tariffs, import duties or imposts

Supply side economic theory

leave the supply of money with the people