Unit 4.7- 4.9 Ideology and Economic Policy

bonds

A certificate issued by a government which promises to pay back with interest the money borrowed from the buyer of the certificate.

Federal Reserve Board

A seven-member board that sets member banks reserve requirements, controls the discount rate, and makes other economic decisions.

Fiscal policy

the use of government spending and revenue collection to influence the economy

Flat tax

A tax system in which all people pay the same percentage of their income

Inflation

A general increase in prices and fall in the purchasing value of money.

Internal Revenue Service (IRS)

branch of the U.S. Treasury Department that collects taxes

Monetary Policy

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

Multiplier effect

An effect in economics in which an increase in spending produces an increase in national income and consumption greater than the initial amount spent.

Progressive tax

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

Reserve Requirement Ratio

A certain percentage of deposits banks need to keep

Sixteenth Amendment (1913)

Gave Congress the power to collect taxes on people's income

Supply-side economics (Reaganomics)

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.

trade balance

the value of a nation's exports minus the value of its imports; also called net exports

Keynesian economics

Economic theory based on the principles of John Maynard Keynes stating that government spending should increase during business slumps and be curbed during booms.

Discount rate

Rate the Federal Reserve charges for loans to commercial banks

Conservative

people who generally favor limited government and are cautious about change

Ideology

a system of ideas and ideals, especially one that forms the basis of economic or political theory and policy.

Liberal

people who generally favor government action and view change as progress

libertarian

One who believes in limited government interference in personal and economic liberties

moderate

Person whose views are between conservative and liberal and may include some of both ideologies

Partisan/Partisanship vs Bipartisan or Non-partisan

Devoted to or biased in support of a party. (Bipartisanship would be to work with the opposing party on efforts like legislation. Non- partisan would mean not associated with a party)