Economics #3 Flashcards
Understand and define fiscal policy.
Fiscal policy is the use of government taxes and spending to alter macroeconomic outcomes.
How the Government receives and spends money?
Fiscal Policy
What proposals have been made to fix fiscal policy and reduce the budget deficit.
- Balanced budget amendment
- Line-Item Veto
- Privatization
- impose a deficit ceiling that is decreased each year until it reaches 0
What is a balanced budget?
a rule requiring that a state can’t spend more than it’s income
What is line-item veto?
authorizes to reject particular provisions of a bill enacted by a legislature without vetoing the entire bill.
what is deficit ceiling
a limit on the amount of money the U.S government is allowed to borrow to pay it’s bills.
Define the barter system and know the limitations of a barter system
Exchanging of one good for another, the limitation is the central requirement is called a double coincidence of demand, because we both want what each other has.
What is barter system?
system of trading goods and services without the use of money
Define money ?
Money is anything people accept in exchange for goods and services,
What gives money value?
The goods and services that it purchases and money is money because people say it’s money
What are the functions of money?
It functions as medium of exchange, standard of value and store of value.
What are the aspects of “good money”?
durable, easy to identify, hard to counterfeit, easy to store, able to control the supply.
What are the forms of our money supply?
We hold it in transactions account savings, checking accounts, cash currency coins.
What is a central bank?
They are the bank for the USA our nation. Also, a financial institution established by government to oversee a nations monetary system
What is legal tender?
The law says must be accepted as payment
