Chapter 31 Monetary and Fiscal Policy

What is Fiscal Policy?

Fiscal policy refers to government spending and taxation decisions made to influence the economy.

What are the main tools of Fiscal Policy?

The main tools of fiscal policy are government spending and taxation.

What is Monetary Policy?

Monetary policy involves the management of money supply and interest rates by central banks to influence economic activity.

Who conducts Monetary Policy in the United States?

The Federal Reserve (Fed) conducts monetary policy in the United States.

What is Expansionary Fiscal Policy?

Expansionary fiscal policy involves increasing government spending or decreasing taxes to stimulate economic growth.

What is Contractionary Fiscal Policy?

Contractionary fiscal policy involves decreasing government spending or increasing taxes to slow down economic growth.

What is the purpose of the Federal Reserve?

The purpose of the Federal Reserve is to manage inflation, maximize employment, and stabilize the financial system.

What is a Budget Deficit?

A budget deficit occurs when government expenditures exceed revenue.

What are Open Market Operations?

Open market operations are the buying and selling of government securities by the Federal Reserve to control money supply.

What is the Discount Rate?

The discount rate is the interest rate charged by the Federal Reserve to commercial banks for short-term loans.