the government should leave as much money as possible with the people and have laissez-faire approach
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Keynesian economics
addresses fiscal policy, focuses on using active government policy to manage aggregate demand to address or prevent economic recessions.
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trade balance
when a nation exports more than it imports, good
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trade deficit
when a nation imports more than it exports
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bonds
securities, government IOUs, traded by the Fed
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discount rate
the interest rate at which the government loans dollars to commercial banks to combat higher reserve requirements, regulated by the Fed
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Federal Reserve Board
The Fed, manages money supply and sets monetary policy by buying and selling bonds, regulating reserve requirements, and setting interest and discount rates
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fiscal policy
economics policy focusing on government spending and taxation
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flat tax
citizens are all taxed at the same rate, conservative
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inflation
rising prices and devaluation of the dollar
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Internal Revenue Service
oversees tax collection process
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monetary policy
focuses on government and bank actions
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multiplier effect
a mechanism in Keynesian economics by which an increase in spending results in economic growth greater than the amount being spent
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reserve requirement
the amount of money banks must have at all times, regulated by the Fed
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entitlements
government services Congress promised by law to citizens
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