Define each of the following terms as they relate to monetary and fiscal

Treasury Bills

short-term government securities issued at a discount from face value and returning the face amount at maturity

contractionary money policy

- Plans to decrease money supply - Tight Money: Less money is in circulation

Hyperinflation

A very rapid rise in the price level; an extremely high rate of inflation.

Liquidity

Availability of resources to meet short-term cash requirements.

Keynesian economics

Economic theory based on the principles of John Maynard Keynes stating that government spending should increase during business slumps and be curbed during booms.

Expansionary Money Policy

Expanding the money supply -->expanding the economy

fiscal policy

Government policy that attempts to manage the economy by controlling taxing and spending.

monetary policy

Government policy that attempts to manage the economy by controlling the money supply and thus interest rates.

deficit spending

Government practice of spending more than it takes in from taxes

discount rate

Rate the Federal Reserve charges for loans to commercial banks

intrest rate

The percentage at which the money loaned is returned with added percentage multiplied by original cost

Stimulus

a coordinated effort to increase gov spending and lower taxes and interest rates to stimulate an econemy

Mortgage-backed security

a debt security created by pooling together a group of mortgage loans whose periodic payments belong to the holders of the security

Inflation

a general increase in prices and fall in the purchasing value of money.

Aggregate Demand

the amount of goods and services in the economy that will be purchased at all possible price levels

federal reserve

the central bank of the United States

reserve ratio

the fraction of deposits that banks hold as reserves

federal funds rate

the interest rate at which banks make overnight loans to one another

quantitative easing

when the Fed buys longer-term government bonds or other securities