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4 main jobs of the Federal Reserve
set monetary policy, regulate banks, payment services, and financial stability
ways the Federal Reserve can “heat up” the economy
lowering interest rates, lowering the reserve requirement, and open market asset purchases
ways the Federal Reserve can “cool down” the economy
raising interest rates, raising the reserve requirement, and open market asset sales
monetary policy purpose
manage economic fluctuations ensuring low unemployment and minimal inflation
ways the fiscal policy can “cool down” the economy
higher taxes and decreased government spending
ways the fiscal policy can “heat up” the economy
lower taxes and increased government spending
deficit
is the yearly difference between revenue for the government and yearly expenses of the government, which is added every year to the running debt
inflation
when the buying power of money goes down and prices go up
hyperinflation
where inflation is very high and usually accelerating
outcome of high inflation
everyone loses buying power, the cost of borrowing increases, and savers are negatively impacted with inflation
demand pull theory
prices are pulled up because the demand is greater than supply
cost-push theory
prices are pushed up because the cos of resources and labor increases
cyclical unemployment
anytime there is a direct link between a downturn in the economy and an increase in unemployment
frictional unemployment
when people change jobs or are looking for their job
seasonal unemployment
caused by seasonal issues
structural unemployment
when people become unemployed because they lack education or certain skills
who is apart of the labor force
at least 16 years old, has a job, and is actively looking for a job
not a part of the labor force
retired or disabled, not looking for a job, given up looking for work, not working
gross domestic product
the value of all final goods and services produced by a country
consumer price index
value of a market basket of goods and services
Note 
Flashcard (100)