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Ch. 18
Economic Policy
| Question | Answer |
|---|---|
| fluctuation b/w expansion and recession that is a part of modern capitalist economies | business cycle |
| means "to allow to do, to leave alone." It's a hands-off governmental policy that is based on the belief that gov't. involvement is wrong | laissez-faire |
| alternative to laissez-faire state; the gov't. takes an active role in guiding and managing the private economy | interventionist state |
| a situation in which there is economic growth, rising national income, high employment and steadiness in the general level of prices | economic stablilty |
| a rise in the general price levels of an economy | inflation |
| a short-term decline in the economy | recession |
| What causes a recession? | investment sags, production falls off, and unemployment increases |
| a form of gov't regulation in which the nation's money supply and interest rates are controlled | monetary policy |
| a seven-member board that sets member banks' reserve requirements , controls the discount rate, and makes other economic decisions | Federal Reserve Board |
| governmental requirements that a portion of member banks' deposits must be retained to back loans made | reserve requirements |
| the rate of interest at which member banks can borrow money from their regional Federal Reserve Bank | discount rate |
| the buying and selling of gov't securities by the Federal Reserve Bank in the securities market | open market operations |
| federal gov't policies on taxes, spending, & debt management w/ respect to employment, price stability, and growth | fiscal policy |
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