econ

Barter

Exchange goods without involving money.

Deficit

An excess of federal expenditures over federal revenues.

Deficit Spending

Government practice of spending more than it collects in from taxes

Direct Tax

a tax an individual pays directly to the government

Discount Rate

the minimum interest rate set by the Federal Reserve for lending to other banks.

Divisibility

One of four characteristics that enables an asset to better function as money--the item used as money can be easily divided into small increments so that it can match commodity values more precisely.

Durability

the ability to withstand wear, pressure, or damage.

Easy Money Policy

monetary policy resulting in lower interest rates and greater access to credit; associated with an expansion of the money supply

Federal Reserve

the central bank of the United States

Fiscal Policy

Government policy that attempts to manage the economy by controlling taxing and spending.

Flat Tax

proportional tax on individual income after a specified threshold has been reached

Indirect Tax

a tax levied on goods or services rather than on persons or organizations

Keynesian economics

Economic theory that government spending should increase during business slumps and be curbed during booms.

Medium of Exchange

Any item sellers generally accept and buyers generally use to pay for a good or service; money; a convenient means of exchanging goods and services without engaging in barter.

Monetary Policy

Government policy that attempts to manage the economy by controlling the money supply and thus interest rates.

Money Multiplier

the amount of money the banking system generates with each dollar of reserves

Open Market Operations

the buying and selling of government securities to alter the supply of money

Progressive Tax

A tax for which the percentage of income paid in taxes increases as income increases

Proportional Tax

A tax in which the average tax rate is the same at all income levels.

Regressive Tax

A tax for which the percentage of income paid in taxes decreases as income increases

Reserve Requirement

the percentage of deposits that banking institutions must hold in reserve

Store of Value

something that keeps its value if it is stored rather than used

Supply-side Economics

An economic philosophy that holds the sharply cutting taxes will increase the incentive people have to work, save, and invest. Greater investments will lead to more jobs, a more productive economy, and more tax revenues for the government.

Tight Money Policy

monetary policy that makes credit expensive and in short supply in an effort to slow the economy

Unit of Account

a measure used to set prices and make economic calculations