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AP Gov Vocab 4
| Term | Definition |
|---|---|
| bonds | an i.o.u a loan |
| discount rate | the interest rate on the loans that the fed makes to bank |
| federal reserve board | a seven-member board that sets member banks reserve requirements, controls the discount rate, and makes other economic decisions |
| fiscal policy | government policy that attempts to manage the economy by controlling taxing and spending |
| flat tax | a tax system in which all people pay the same percentage of their income |
| inflation | a continuous rise in the price of goods and services |
| internal revenue service (irs) | the branch of the us treasurey department in charge of collecting taxes |
| monetary policy | government policy that attempts to manage the economy by controlling the money supply and thus interest rates |
| multiplier effect | an effect in economics in which an increase in spending produces an increase in national income and consumption greater than the initial amount spent |
| north american free trade agreement (nafta) | allows open trade between the us, mexico, and canda |
| progressive tax | a tax for which the percentage of income paid increases as income increases |
| reserve requirement | the percentage of deposits that banking institutions must hold in reserve |
| suppy-side economics | an economic philosphy that holds the sharply cutting taxes will increase the incentive people have to work, save, and invest. greater investments will lead to more jobs, a more productive economy, and more tax revenues for the government |
| trade balance | the vaule of a nation's exports minus the vaule of its imports; also call net exports |
| entitlements programs | government programs providing benefits to qualified individuals regardless of need |
| mandatory spending | federal spending by law that continues without the need for annual approvals by congress |
| medicad | federal program that provides medical benefits for low-income persons |
| medicare | a federal program of health insurance for person 65 of age and older |
| patient protection and affordable care act | health care reform law passed in 2010 that includes incentives and pentalties for employers providing health insurance as a benefit |
| social security act of 1935 | created both the social security program and a national assistance program for poor children, usually called afdc |
| social welfare | programs to help certain groups of people |
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