AP Gov Economic and Monetary Policy

inflation

A rise in the general price level (and decrease in dollar value) owing to an increase in the volume of money and credit in relation to available goods.

FRB Board of Governors

A seven-member group that oversees or manages the running of an institution. In the financial world, the best known is that of the Federal Reserve. It is a federal government agency with seven members, appointed by the president and confirmed by the senate, along with 1,800 in staff.

Bear Market

A steady drop in the stock market over a period of time

Continuing Resolution

A temporary funding law that Congress passes when an appropriations bill has not been decided by the beginning of the new fiscal year on October 1.

Office of Management and Budget (OMB)

An office within the Executive Office of the President that is responsible for creating the president's annual budget proposal to Congress, reviewing proposed rules, and other budget-related tasks.

John Maynard Keynes

British economist who argued that for a nation to recovery fully from a depression, the govt had to spend money to encourage investment and consumption

CBO

Congressional Budget Office - congress' check on the budget, Congressional Budget Office. They come up with their own budget options to present that may differ from the President's proposals.

Open Market operations

Consist of purchase and sale of government securities (bills and bonds) in the open market. When the Fed purchases govt securities it increases the money supply. (puts money into circulation to pay for securities).

Regulation

Efforts by government to alter the free operation of the market to achieve social goals such as protecting workers and the environment.

Discretionary Spending

Federal government spending which government planners can make choices (ex. defense spending)

Deregulation

The lifting of restrictions on business, industry, and professional activities for which government rules had been established and that bureaucracies had been created to administer.

Federal outlays

government purchases,transfer payments, Social Security

GDP (Gross Domestic Product)

i. Market value of all goods and services produced within a nation-state in one fiscal year. Private consumption and gross investment and government spending and (exports-imports)

Recession

A period of economic activity characterized by negative growth, which reduces demand for goods and services

Bull Market

A period of increased stock trading and rising stock prices

Adam Smith

(Scottish economist) in The Wealth of Nations, he created the concept of laissez-faire ( government should leave economy alone) & applied natural law to means of production & exchange (supply & demand); saw mercantilism as government interference in economy or free trade; believed that enlightened self-interest would create the best production & exchange for market conditions; government should only have 3 roles: protect society from invasion (army); defend citizens from injustice (police); & keep up public works (roads, canals, bridges) that private individuals could not afford to provide but that society needed

Federal Budget

A detailed financial document containing estimates of federal income and spending during the coming fiscal year

Fiscal Policy

A government policy for dealing with the budget (especially with taxation and borrowing)

Monetary Policy

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

Discount Rate

The interest rate on the loans that the Fed makes to banks

Non-discretionary spending

Items in the annual budget that are non-military in nature and are available for Congress to adjust. Examples would be education, highways and transportation items, foreign aid, and national parks. These items would also exclude entitlements, such as Social Security, Medicare, veterans' benefits, and government pensions.

Federal Fiscal Year

October 1 - September 30

Federal Reserve Banks

The 12 banks chartered by the U.S. government to control the money supply and perform other functions. (See central bank, quasi-public bank, and bankers' bank.) a system of banks created by the federal government to store the government's money. The Federal Reserve Bank controls the amount of the government's money that is allowed out into circulation, it sets "interest rates" that must be charged by banks when customers borrow, and it "clears "all checks that are written by ordinary people. There are 12 of these banks located around the country.

Janet Yellen

The Chairwoman of the FRB Board of Governors of the federal reserve system in the United states

Federal Budget Deficit

The amount by which federal expenditure exceeds federal revenue.

GDP (per capita)

an approximation of the value of goods produced per person in the country, equal to the country's GDP divided by the total number of people in the country.

Supply-side theory

an economic philosophy that holds that 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

Reserve Requirements

regulations on the minimum amount of reserves that banks must hold against deposits