Fiscal and monetary policy review (economics)

What are the two components of fiscal policy?

Government spending and taxation

When economy is experiencing high unemployment,

what would be 1 appropriate fiscal policy?

Increase government spending

What entity changes interest rates and what do they change to accomplish this

Federal reserve bank

What are the 3 tools of the FED?

Required reserve ratio,but/sell bonds ,discount rate

During a time of a recession, give a fiscal policy that would help alleviate the problem.

Lower taxes more government spending

How do banks primarily make money?

Off the interest of loans they give

How does increasing the money supply speed up the economy?

Increase the money supply decrease interest rate causing people to spend more money

Give one expansionary monetary policy

Reduce required reserve ratio

What is an appropriate monetary policy when we are in a recession.

Lower discount rate

f your nominal wages increased by 5% and the expected rate of inflation was 2%, how much did your Real wages change by?

3%

Describe what a surplus budget is.

Means there is no money left over after what has been planned to be spent

f Unemployment was the primary problem with the economy, give one appropriate fiscal policy

Increase government spending

What is the difference between the deficit and the Debt?

A deficit means there is a negative difference between the amount of money and th amount of spent debt is the amount of money you owe

What is open market operations?

Open market operations are when the central bank buys or sells government securities in the open market.