| A | B |
|---|
| Gross Domestic Product | How much the U.S. makes in a year |
| Debt | Accumulation of how much money is owed to other people or countries since 1776 |
| Deficit | When the government spends more than it collects in revenue in one year |
| Consumption | Makes up the largest portion of the GDP equation |
| Budget Surplus | When the revenue is greater than the spending in one year |
| Crowding Out | When the government borrow money for deficit spending, there is less money for private businesses to borrow |
| Federal Reserve System | A central banking system without a central bank , that was created to organize banking practices in the United States |
| District Banks | 12 banks that represent an area |
| Member Banks | Banks that are part of the Federal Reserve Banking system |
| Board of Governors | Makes decisions on monetary policy for the Fed |
| Inflation | High prices, low value of money |
| Monetary Policy | Decisions made by the Fed that affect the money supply, interest rates, and demand |
| Reserve Requirements | Banks are not allowed to loan out a certain percentage of their deposits. |
| Discount Rate | The interest rate charged by central bank on loans to individual banks |
| Open Market Operations | Occur when a central bank buys or sells bonds with the goal of increasing or decreasing the money supply |
| Expansionary Monetary Policy | Used if you want more money in circulation (Looser Monetary Policy) |
| Contrationary Monetary Policy | Less money in supply, or restrain the rate of growth (Tighter Monetary Policy) |
| Business Cycle | The natural period of recession, boom, depression |
| Lag Time | The period of delay that happens from the time economic policies are created and implemented until they are felt |
| Fiscal Policy | Government’s use of taxes and spending to affect the economy |
| Expansionary Fiscal Policy | Tax cuts allow people to spend and invest freely |
| Contractionary Fiscal Policy | Tax increases lead to more saving and less spending, therefore reducing inflation |
| Mandatory Spending | Spending required by law |
| Discretionary Spending | Spending the government must authorize every year |
| Tax | Mandatory payment to a local, state, or national government |
| Revenue | Government income from taxes and nontax sources |
| Individual Income Tax | Based on how much a person makes through wages, interest, dividends, or tips |
| Coportate Income Tax | Based on how much profit a business makes |
| Sales Tax | Tax on a particular good or service at the time it is bought/purchased |
| Property Tax | Based on value of person's assests |
| Proportional Tax | Same % of tax on everyone |
| Progressive Tax | The higher the income, the higher the tax |
| Regressive Tax | The lower the income, the lower the tax |
| Tax Incentive | Using taxes to encourage or discourage certain economic behaviors |
| Sin Tax | Tax on items that are considered unhealthy or damaging to society |
