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ECO Topic 9 Vocab
ECO Topic 9 Vocabulary
Term | Definition |
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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 | any 12-month period use for budgeting purposes |
Appropriations bill | a bill that authorizes a specific amount of spending by the government |
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 |
Demand-side Economics | a school of thought based on the idea that demand for goods drives the economy |
Keynesian Economics | a school of thought that used demand-side theory as the basis for encouraging government action to help the economy |
Supply-side Economics | a school of thought based of the idea that the supply of goods drives the economy |
Deficit spending | when government expenditures exceed revenues |
John Maynard Keynes | British economist developed a new theory of economics to explain the Great Depression through macroeconomics |
Milton Friedman | one of Reagan’s advisers, a former professor of economics who strongly supported individual freedom and pushed for more laissez-faire polices – hallmarks of classical and supply-side economics |
Budget surplus | a situation in which budget revenues exceed expenditures |
Budget deficit | a situation in which budget expenditures exceed revenues |
Treasury bill | a government bond with a maturity date of 26 weeks or less |
Treasury note | a government bond with a term of from 2 to 10 years |
Treasury bond | a government bond that is used in terms of 30 years |
National debt | the total amount of money the federal government owes to bondholders |
Excess reserves | bank reserves greater than the amount required by the Federal Reserve |
Discount rate | an interest rate that the Federal Reserve charges commercial banks for loans |
Federal funds rate | the interest rate that banks charge each other for loans |
Prime rate | the rate of interest that banks charge on short-term loans to their best customers |
Open market operations | the buying and selling of government securities in order to alter the supply of money |
Easy money policy | a monetary policy that increases the money supply |
Tight money policy | a monetary policy that reduces the money supply |
Monetarism | the belief that the money supply is the most important factor in macroeconomic performance |
Friedrich Hayek | he questioned economist’s ability to influence the economy effectively and had faith in a free economy’s ability to self-adjust |