| A | B |
|---|
| economy | how resources flow from production, to distribution and to consumption |
| economics | study of choices made in allocating resources |
| macroeconomics | includes employment rate, GDP, and taxing policies |
| microeconomics | includes individual consumers, families and individual businesses |
| fiscal policy | government influences economy through taxing and spending |
| budget surplus | revenue higher than expenses |
| budget deficit | expenses higher than revenue |
| federal debt | amount government has borrowed and not repaid |
| monetary policy | Federal Reserve decisions to shape interest rates and the money supply |
| commercial banks | privated owned to provide services to customers |
| money supply | total amount of money in the economy |
| money | medium of exchange or means of payment |
| M1 money supply | includes all currency plus checking accounts and traveler's checks |
| M2 money supply | includes M1 plus savings accounts, money markets, and CDs |
| open market operations | Federal Reserve buys and sells government securities |
| discount rate | rate Federal Reserve charges when it loands funds to banks |
