Government And Economics Flashcards
(20 cards)
What is fiscal policy?
The use of government spending and taxation to influence the economy. Governments typically use fiscal policy to promote strong and sustainable growth and reduce poverty.
What is monetary policy?
When a government decides the right amount of money for an economy, usually to fight inflation.
What does Gross Domestic Product (GDP) measure?
The value of goods and services produced in a country over the period of a year.
What are taxes?
A compulsory contribution to state revenue, levied by the government on workers’ income and business profits, or added to the cost of some goods, services, and transactions.
What are savings?
Money that you don’t spend immediately.
What are banks and financial institutions?
Where money is kept. They take savings and make investments to generate a profit.
What are imports?
Goods and services bought from another country.
What are exports?
Goods and services sold to another country.
What is the economic cycle?
The overall state of the economy as it goes through four stages in a cyclical pattern: expansion, peak, contraction, and trough.
What is inflation?
When prices of goods and services are rising.
What is deflation?
When prices of goods and services are generally falling.
What is unemployment?
Measures the number of people who want a job but cannot get one.
What is infrastructure?
Roads, bridges, dams, the water and sewer systems, railways and subways, airports, and harbors.
What is an economic model?
A simple hypothesis to understand how people’s needs can be met with limited resources.
What is the US federal budget?
Major expenditure categories are healthcare, Social Security, and defense; income and payroll taxes are the primary revenue sources.
What is a government deficit/surplus?
A deficit is recorded when government spends more than its income and a surplus when government spends less than its income.
What is government debt?
When government borrows money to spend.
What are open market operations?
When Central Banks carry out operations to sell or buy government securities - adding or taking away money from the market.
What is a central bank?
Has power to control money supply through changing interest rates and printing money. US central bank is the Federal Reserve.
What is investment?
To spend money to make more money.
