Economics Chapter 9 Part 2

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25 Terms

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Department of the Treasury
responsible for creating coinage and paper $ in America (Bureau of the Mint/Engraving and Printing)
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Federal Reserve System
privately owned agency that controls the money supply in America
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Board of Governors
leaders of the Federal Reserve (appointed by the President and confirmed by the Senate)
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FOMC
deals with the buying and selling of government properties and finances
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Federal Reserve Banks
12 total (1 for each district); controls policies, interest rates, and money supply of banks in each district
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Open Market Operations
selling government investment properties to the American people
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Selling
reduces money supply
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Buying
increases the money supply
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Fractional Reserve Banking
Federal Reserve determines the reserve ratio for the bank (the % of deposits they must not loan out) - raised to reduce money in circulation
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Discount Rates
private banks can borrow money from the Federal Reserve; interest is paid back in each loan -raised to reduce money in circulation
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Easy Money
more funds in circulation through ready approval of loans to increase money in circulation
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Recession
a period during which the economy recedes or declines
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Milton Friedman
conservative economist during Reagan’s Presidency
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Monetarism
the variation in the money supply is the main source of economic fluctuations
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Banks
most common; offer various kinds of savings and checking accounts
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Credit Unions
members can join voluntarily and have voting privileges for making decisions and creating policies in the organizations
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Finance Companies
make loans directly to consumers
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Insurance Companies
receive a premium paid by the insured in the event of loss or death
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Pension Funds
receive funds from a company’s employees and employers may contribute on behalf of the employees
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Collateral
property that a lender will hold until loans are repaid; secured loans are backed by collateral
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Wage Garnishment
court order demanding that an employer take a specified amount out of an employee’s wages each paycheck to pay the creditor
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Down Payment
a large initial cash payment
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Equity
partial ownership of an item
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Chapter 7 Bankruptcy
most of this person’s debts are forgiven
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Monetarism

What theory does Milton Friedman support