Economy Quiz Flashcards
Federal Reserve
The central banking system in America.
Discount Rate
The minimum interest rate set by the Federal Reserve for lending to other banks.
Federal Funds Rate
The interest rate that banks charge each other for loans.
Required Reserve Ratio
The fraction of deposits that banks are required to keep in reserve.
Open Market Operations
The buying and selling of government securities in order to alter the supply of money.
Progressive Tax
As income goes up percent tax goes up.
Proportional Tax
As income goes up percent tax stays equal.
Regressive Tax
As income goes up percent tax goes down.
Mandatory Spending
Government must spend this money.
Discretionary Spending
Government has options.
Medicare
Pays for hospital cost 65+
Medicaid
Pays bills for low income families.
Budget Surplus
Spend less than what you take in.
Budget Deficit
Spends more than what you take in.
National Debt
Total amount of money we owe.
Multiplier Affect
When an input causes a larger output. Every dollar spends 8-9 will be created.
Productive Capacity
The maximum output an economy can sustain over. period of time without inflation.
Structure of Federal Reserve
- Board of Governors
- 12 District Reserve Banks
- Member Banks and other Depository Institutions
4 ways Fed can alter Money Supply.
- Discount Rate
- RRR
- Open Market Operations
- Interest on Reserves
Where does the USA Budget go?
- Education
- Public Safety
- Roads
What is the Crowding Out Effect?
The tendency for increases in government spending to cause offsetting reductions in spending in the private sector
