financial accounting

What is fiscal retrenchment?

A process of reducing government deficits and debt accumulation, often through spending cuts, tax increases, or a combination of both.

What is liquidity provision?

A process where the Federal Reserve acquired parts of government-sponsored mortgage companies to increase liquidity in the financial system and support the housing market.

What is TARP?

A program initiated by the Federal Reserve and U.S. Treasury that provided $700 billion to purchase troubled assets from commercial banks to stabilize the financial system, reduce risk, and increase lending.

What is the goal of fiscal policy?

Achieving stable growth, full employment, and price stability.

What is the goal of monetary policy?

Achieving stable growth, low inflation, and full employment.

What is monetary policy?

Actions taken by a central bank to influence the money supply, interest rates, and credit availability.

What does quantitative easing involve?

Central bank purchasing financial assets

What is fiscal policy?

Government actions related to taxation, spending, and borrowing to influence the overall level of economic activity.

What assets are typically purchased during quantitative easing?

Government bonds or mortgage-backed securities from commercial banks and private institutions

What is the purpose of quantitative easing?

Lower long-term interest rates, stimulate lending, boost economic growth

What is quantitative easing?

Monetary policy tool to increase money supply

How many rounds of quantitative easing have there been?

Multiple rounds, often referred to by sequence (e.g., QE1, QE2, QE3)

What are recessions?

Periods of economic decline.

What are booms?

Periods of rapid economic growth.

What is business cycle?

Recurring fluctuations in economic activity.

What are the macroeconomic goals of fiscal policy?

Stable growth, full employment, and price stability.

What are the macroeconomic goals of monetary policy?

Stable growth, low inflation, and full employment.

What is interest rate?

The cost of borrowing or return on investment.

What is money demand?

The desire to hold liquid assets for transactions and value.

What is inflation?

The rate at which prices rise.

What is fiscal space?

The room in a government's budget to implement discretionary fiscal policy changes without jeopardizing fiscal sustainability or public debt levels.

What is money supply?

The total amount of money in circulation.

What is the purpose of asset swaps?

To improve liquidity and financial stability.

What is the purpose of liquidity provision?

To increase liquidity in the financial system and support the housing market.

What is the purpose of TARP?

To stabilize the financial system, reduce risk, and increase lending.

What is aggregate demand?

Total demand for goods and services.

What is long-run aggregate supply?

Total production at full employment and constant tech.

What is short-run aggregate supply?

Total production in the short term.

What are asset swaps?

Transactions where the Federal Reserve allows financial institutions to exchange their less liquid long-term financial assets for short-term U.S. Treasury securities.

What is short-run equilibrium?

When demand equals supply in the short term.

Was TARP fully repaid?

Yes, by December 31st, 2012, 97% of the amount was repaid.