Monetary and Fiscal policy unit review Flashcards
What is the goal of the government during a contraction period?
To increase consumer’s disposable income
Who is the head of the fed?
Jerome Powell
What personnel make up the FOMC?
Board of governors and 5 out of the 12 heads of Fed banks
Inflation is a sign of which period of the business cycle?
Expansion
A regressive income tax is when income _ and the tax rate _
Increase and decrease
What are open market operations?
The buying/selling of government securities
What is the main role of the FED?
Loan money to banks
Who does the FDA and USDA protect?
Consumers
How many branch banks of the FED are there?
25
How does a bank become a member of the fed?
A charter
What are reserve requirements?
The percent of deposits that cannot be loaned out
What is the discount rate?
The interest rate the FED charges banks for borrowing money
What are the four characteristics of a tax?
Simplicity, efficiency, certainty, equity
What are transfer payments?
Money given to improve the quality of life
Who carries out the FED’s
Policy?
Federal reserve banks
Monopolies destroy
Competition
The government gets money to operate from two places. What are those two places?
Taxes and bonds
What are the two types of taxes?
Direct and indirect
Action through taxes and government spending in the economy is called what?
Keynesian economics
_ taxes take a fixed percent of income.
Direct (proportional)
When income increases and the tax rate increases, this is called what type of tax?
Progressive (direct)
What is another term for indirect taxes?
Excise taxes
What is taxed by indirect taxes?
Taxes on good/services
When does the fiscal year end?
September 30
