Golem Beatdown

Fiscal Policy

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

Federal Budget

a written document estimating the federal government’s revenue and authorizing its spending for the coming year

Fiscal Year

a 12 month period used for budgeting purposes

Expansionary Policy

a fiscal policy used to encourage economic growth, often through increased spending or tax cuts

Contractionary Policy

a fiscal policy used to reduce economic growth, often through decreased spending or higher taxes

Classical Economics

a school of thought based on the idea that free markets regulate themselves

Keynesian Economics

a school of thought that uses demand side theory as the basis for encouraging government action to help the economy

Multiplier Effect

the idea that every one dollar change in fiscal policy creates a change greater than one dollar in the national income

Automatic Stabilizers

tools of fiscal policy that increase or decrease automatically depending on changes in GDP and personal income

Supply Side Economics

a school of thought based on the idea that the supply of goods drives the economy

Deficit Spending

the situation in which the government’s expenditures exceed its revenues

Crowding Out Effect

the loss of funds for private investment caused by government borrowing

Monetary Policy

the actions that the Federal Reserve System takes to influence the level of real GDP and the rate of inflation in the economy

Reserve Requirements

the amount of reserves that banks are required to keep on hand

Discount Rate

the interest rate that the Federal Reserve charges commercial banks for loans

Open Market Operations

the buying and selling of government securities in order to alter the supply of money