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Fiscal/Monetary

VUS.15e

QuestionAnswer
What is inflation? Prices go up and the value of the dollar goes down
What is a recession? A downturn in the economy with high unemployment
What is fiscal policy? Taxing and spending actions by Congress and the President to influence the economy
What two actions can Congress and the President take to reduce inflation? 1) Raise taxes 2) Cut government spending
What two actions can Congress and the President take to end a recession? 1) Lower taxes 2) Increase government spending
Who controls fiscal policy? Congress and the President
What power gives Congress and the President control over fiscal policy? 1) The Lawmaking power 2) Congress passes a bill, and the President signs it into law
What is monetary policy? Federal Reserve actions to influence the economy by regulating the money supply and the availability of credit
What determines the availability of credit? Interest rates
What action can the Federal Reserve take to reduce inflation? Raises interest rates
What action can the Federal Reserve take to end a recession? Lowers interest rates
Who controls monetary policy? the Federal Reserve
What power gives the Federal Reserve control over monetary policy? The power to set interest rates
Created by: wzuger
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