Economics

progressive tax

tax rate increases as income increases

supply side economics

the government should leave as much money as possible with the people and have laissez-faire approach

Keynesian economics

addresses fiscal policy, focuses on using active government policy to manage aggregate demand to address or prevent economic recessions.

trade balance

when a nation exports more than it imports, good

trade deficit

when a nation imports more than it exports

bonds

securities, government IOUs, traded by the Fed

discount rate

the interest rate at which the government loans dollars to commercial banks to combat higher reserve requirements, regulated by the Fed

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

fiscal policy

economics policy focusing on government spending and taxation

flat tax

citizens are all taxed at the same rate, conservative

inflation

rising prices and devaluation of the dollar

Internal Revenue Service

oversees tax collection process

monetary policy

focuses on government and bank actions

multiplier effect

a mechanism in Keynesian economics by which an increase in spending results in economic growth greater than the amount being spent

reserve requirement

the amount of money banks must have at all times, regulated by the Fed

entitlements

government services Congress promised by law to citizens