AP Government 4.9 Terms

Fiscal Policy

concerned with government spending and taxation

Monetary Policy

manages the supply and demand of its currency and thus the value of the dollar

Keynesian Economics

the government should intervene through fiscal policy to manage demand and stabilize the economy during downturns

Supply-Side Economics

the government should leave as much of the money supply a possible with the people, letting the laws of economics, such as supply and demand, govern the marketplace

Sixteenth Amendment [progressive tax]

allows Congress to establish an income tax

The Federal Reserve System [1913]

consists of the Federal Reserve Board and 12 Federal Reserve Banks that manage the money supply

Discount Rate [interest rate from the Fed]

the interest rate at which the government loans actual dollars to commercial banks