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Money and Banking
Money, Banking, and the Budget
| Question | Answer |
|---|---|
| How money increases when banks use deposits to lend to new borrowers | Money multiplier effect |
| The situation in which the average of all prices of goods and services in an economy is rising | Inflation |
| Theory that the government should not interfere in the economy | Laissez-faire economics |
| Theory that the government should take an active role to stimulate demand by public works projects and cutting taxes during a recession; thinks deficit spending is acceptable | Keynesian economics |
| The percentage of the civilian labor force out of work | Unemployment rate |
| Coins and paper money | Currency |
| The total output of the goods and services that the US produces | Gross domestic product (GDP) |
| Using taxes and spending to impact the economy | Fiscal policy |
| A decline in the real GDP for half a year | Recession |
| When high inflation is accompanied by high unemployment | Stagflation |
| A policy recommending tax cuts and deregulation in order to increase economic growth | Supply side economics |
| Using the supply of money to control the economy | Monetarism |
| The interest rate that the Federal Reserve banks charge to their member banks for loans | Discount rate |
| Spending that is required by law | Mandatory spending |
| A tax that varies with income - the more money you make, the higher the tax rate | Progressive tax |
| Measures the prices of items bought by consumers in a metropolitan area | Consumer Price Index |
| Spending that is not required by law | Discretionary spending |
| Benefit programs, like social security, whose costs are set by law and are not subject to congressional action | Entitlements |
| A tax that falls equally on everyone, regardless of income | Regressive tax |
| The executive agency reviews and modifies funding requests submitted by executive departments and federal agencies in order to conform with the president's spending priorities | Office of Management and Budget |
| The legislative agency that gives advice to the House and Senate Budget committees with information on the economic outlook for the country | Congressional Budget Office |
| Provides the largest share of federal revenue | Individual income taxes |
| Finances social security benefits, Medicare, and the unemployment compensation program | Social insurance taxes |
| Taxes on nonessential goods | Luxury taxes |
| Paid by corporations on their net incomes | Corporate income tax |
| Taxes on items such as tobacco, alcohol, and gambling | Sin taxes |
| Tax on the assets of someone who dies | Estate tax |
| Taxes on the manufacture, sale, or consumption of goods and the performance of services | Excise taxes |
| Paid by most employers and employees in their salary checks to finance social security | Payroll taxes |
Created by:
betsynewmark